Creative Writing – 143
Shale gas – Basic info – America’s readiness to sell it to India
Shale gas, is the last god-given life line to the human race before the we equip itself to switch to renewable sources of energy in large scale.
Questions and Answers
Q1. What is shale gas ?
Answer – It is natural gas trapped in shale found in varying depths underground from the surface. Shale is nothing but black/ grey masses of sedimentary rock consisting of mud like materials.
Q2. Where can we scout for gas-holding shale?
Answer – Happily for the energy-hungry human race, shale gas rocks are quite ubiquitous. Nearly all regions of the earth have it. With explorations for this bounty of Nature proceeding apace, more countries in the world (including India) will soon boast of rich shale gas deposits.
Q3. What use the shale gas?
Answer – It is natural gas. So, it can be put to the same use as the natural gas we get from oil wells. We can generate power, produce urea, run automobiles, heat our homes, cook our meals and put it to a host of industrial uses.
It causes much less pollution compared to coal, diesel or petrol. It is also transportable by pipes over short and medium distance, and by liquefaction and tankers over large distances.
Q4. What about the cost?
Answer – Prices of natural gas have fallen sharply over the last 5-6 years due to the discovery of many fecund shale gas deposits in America and elsewhere. In fact, America is likely to the much-cherished ‘energy-sufficient’ status in the coming decade because of the proliferating shale gas wells all over the country.
Q5. How will the abundance of shale gas impact world politics and economics?
Answer – Abundance of shale gas will reduce the global demand for crude oil. Consequently, crude prices might stagnate or even fall as international trade in crude oil slows down.
It is now certain, the United States of America, will stop importing crude oil from the oil-rich countries like Saudi Arabia, Kuwait, Iraq, Qatar, and other Arab countries. This means, America will feel free to steer its foreign policy in a more independent manner, caring much less for Arab sensitivity. This will have ramifications for the Arab world, Israel and the rest of the world. Hawks in Israel will rejoice much to the chagrin of the Islamic world and Palestine sympathizers.
For commodities export-dependant economies such as Russia, falling gas prices means less income from exports, less clout over gas-dependant Europe and less leverage in the global arena. Russia will have to do some belt-tightening to balance its budget. Many of its grandiose plans will be shelved or delayed.
Saudi Arabia will also see that it no longer can influence American foreign policy the way it is able to do now. This might be an un-settling experience for them, given the strong views of most Americans about their dismal record in human rights and gender equality. Saudi Arabia’s huge arms buying budget might get a hair-cut. All these are good news for Israel. Ironically, Saudis have always campaigned against unreasonable price increases in crude oil prices, imploring other OPEC members to rein in their greed.
The oil-rich kingdoms of the Gulf region will also miss the American buyer a lot. They too will have to adjust to stagnant or even falling crude prices. The pompous rulers of the Gulf will have less money for their luxury and self-aggrandizement. All this is good news for the common folks who love democracy, better living conditions and a general shift away from oil economy to productive economy.
President Putin’s desires to dominate Europe and make a windfall by artificially increasing the international price of gas through a cartel of gas producing countries now lie in ruins. Putin will step up oil and gas exploration to increase exports, but then, increased availability of oil and gas will further depress energy prices.
Q6. How is shale gas extracted?
Answer – It is simple. A hole is made on the earth’s crust till a passage is obtained to the shale rocks. Pressurized water mixed with certain chemicals are injected into the shale rock surface to shatter it to pieces. The fragmentation of the shale rocks frees the trapped gas which comes rushing up to the surface. Devices here catch the gas and transport it to the buyer.
This process is known as ‘Fracking’.
Q7. What are the environmental hazards?
Answer – Not much really despite the cacophony of protests by environment groups. The high consumption of water is a concern, so is the possibility of the earth caving in areas where underground shale rocks have been blasted. Buildings in the surface might collapse under their own weight as voids develop underground.
Q8. How shale gas is transported?
Answer – Pipelines are very economical for short and medium distances. When the gas needs to be transported to far off buyers, across oceans, customized ships with robust containers are deployed. To do this, the gas is first liquefied under high pressure and low temperature to reduce its volume. The ship carries this highly compressed gas in its containers and carries it to the destination. Loading and unloading of the compressed gas at the start and finish points of the sea journey is done through dedicated terminals located in dedicated ports.
Q9. Does India have shale gas?
Answer – Hopefully yes, although no exploration has been carried out so far.
Q10. Will America sell shale gas to India?
Answer – As per a certain policy change in America, the Department of Energy of the American government has conditionally green-flagged shale gas exports to India. Till now, it was not possible as India does not have a Free Trade Agreement with the United States. The gas will be carried from the a LNG facility located in Freeport Terminal on Quintana Island in Texas.
Q11. The nitty-gritty of the export arrangement?
Answer – For India, this permission for trade has come a bit late. This company (Freeport Terminal) has already got huge investments from China, Japan and Britain, who will get the lion’s share of the permitted LNG dispatches. Actual delivery of gases destined for India is likely to start by 2017-18.
The Government of India’s Gas Authority of India (GAIL) will handle the gas imports. It has executed An LNG ff-take agreement with Sabine Pass Liquefaction LLC, for import of 3.5 million metric tones (mmtpa) per annum on FOB basis.
Apart from GAIL, a few other Indian companies have entered the fray. They have applied for permission to import LNG from the United States.
Q12. How will the American LNG help India?
Answer – As per a rough estimate, the American gas will mean cost-saving of $ 4 to $5 per million metric British Thermal Units (mmbtu).
It is a great boon for the energy-starved Indian economy.
In concrete terms, it means cheaper electricity for the consumer, cheaper Urea and less subsidy burden for the government.
Q13. Some gas statistics pertaining to India?
Answer – Presently, India needs about 2.2 trillion cubic feet (tcf) per annum. By 2016-17, it will rise to 4 tcf, and by 2030, it will rise to 8 tcf. So, the American decision to allow gas exports to India comes as a big relief for the energy planners of India.
In terms of Indian investment in America’s energy sector, we would see that it is not very discouraging. Indian government and companies have already pumped in $4 billion – a small fraction of the $27billion invested by other countries. The total investment in this sector stands at $134 billion. 80% of this has come from American sources and 20% from abroad, with China and European countries leading the way.
In conclusion, we can say that India is grateful to America for this much-welcomed policy shift. It is another good step towards bolstering Indo-U.S relations.