Every drop counts, a statement never rang truer in today's energy starved world. As the world economy grows relentlessly, it is imperative to identify alternative means of fuel. As oil resources are depleted in the rush to get to the last drop; technological investments need to be made that enable faster and deeper drilling than ever before.
As a result, oil is produced or extracted using techniques different from older, conventional (oil well) methods. These include increased spending and technology migration for deep sea drilling, enhanced oil recovery to get everything and evaluation and development of alternate hydrocarbons like shale gas or coal bed methane.
However, I'd like to point out that unconventional oil production is a less efficient process and has greater environmental impacts as compared to the traditional method. The costs are also prohibitive- such investments need greater returns which means coming up against the $125 Brent ceiling. That said; unconventional drilling might hold the key to medium term sustenance by considerably increasing oil and gas production.
With India's energy consumption growing over double the global rate of 2.5% and with forecasts predicting that India and China will be the largest two energy guzzlers very soon, securing supplies is expected to be on top of India's energy and economic agenda for a considerable part of the foreseeable future. The government's intention to identify more deep water blocks is clear – production has to increase from the existing reserves. Production is also not the only way out – the path towards energy independence can be a possibility with a combination of focused alternate hydrocarbon resources with unconventional extraction and production. In the mid-2000's; the KG basin in India was touted to be among the world's largest finds but even after a decade the results are yet to be seen. Furthermore, India has the 4th largest proven coal reserves in the world – yet there continues to be confusion regarding energy in the form of CBM (Coal-Bed Methane) or shale gas. Indian oil companies have limited technical and monetary bandwidth for exploration and development activities in remote areas zones or in alternate fuels. With the objective of energy security by achieving self-sufficiency through increased indigenous production, the Government of India has set itself targets to increase the recovery factor to 40% by 2025 from its existing sources.
This creates a plethora of opportunities for strategic investors having relevant technical expertise and financial muscle to invest in the country through partnerships with local public and private sector companies. Going forward, unconventional oil is going to see an incremental demand over the next 2-3 years and there would be an increased impetus by government and O&G firms to focus on alternate hydrocarbon resources.
Still, I've seen unconventional methods taking a lot of flak. Techniques like fracking for shale gas extraction have resulted in global indignation for air and water pollution. In some cases they have also been blamed for causing earthquakes. Worldwide, governments are putting in place policies regarding unconventional extraction and some countries have even banned it. My view is that as technologies get better these techniques will get more environment friendly. What are your views on this?