Business Standard: Where is India's Fracking Revolution?

There’s an important conversation we are not having right now. There are screaming headlines we have not had to read over the past few years. Iran, Mexico, Norway and Venezuela, four of the ten largest producers of oil until a decade ago, have seen enough production drops in the past decade to have alarm bells ring among traders and analysts, leading to oil prices spikes and supply shortages. 

In such circumstances, news TV channels and newspapers would have normally hosted heated debates on energy security, energy independence and the impact of high oil prices on macroeconomic fundamentals – but none of it happened. An unlikely ‘saviour’ emerged in the form of the American ‘Shale Revolution’. Oil (and gas) production in the United States from ‘shale deposits’ has spiked since 2008, matching one-for-one the drop by other countries, ensuring the stability of global supplies. In this process, the US has become the world’s largest producer of crude oil. That’s correct, the United States now produces more oil than even Saudi Arabia. The availability of oil and gas from shale formations has permitted the US to reduce oil imports and to move from coal to gas (which is far cleaner) for electricity production. 

Globally, oil (and gas) is produced by drilling and extracting from “conventional” reservoirs: it works like putting a straw into a coconut and sipping out the water. Production from shale formations, on the other hand, requires a technique called “fracking”. Since the rocks (or sands) that contain the oil (and gas) are not porous enough for the oil to flow out with little effort, the flow has to be stimulated by fracturing the rock using pressurised liquids. Without getting into technicalities, production from shale or tight sand deposits prove to be far costlier than extracting from conventional reservoirs.  MORE