Will OCTG Capacity in India Support the Upcoming Shale Exploration?

The surging shale gas production in the US and the possibility of replicating this success worldwide holds the potential to revolutionize the global energy market in the future. Horizontal Drilling and Hydraulic Fracturing have opened up previously inaccessible reserves in tight gas and shale for commercial exploitation. With the spread of these technologies into the various regions, countries are looking to replicate the US shale gas boom for themselves. In India, there exists ~ 65tcf of recoverable shale gas potential; which has only come into the spotlight in the last 4 years with ONGC leading the exploration efforts since 2011. This white paper examines the current manufacturing climate in India and the support mechanisms it offers for Shale gas development. India?s natural gas market continues to be in a state of deficit, with demand far exceeding the supplies. In FY12, around 38% of the gas demand was unmet. India imports around 80% of its hydrocarbon energy requirements. As a result, the dependence on LNG imports has increased and there has been an underutilization of gas-consuming industries, particularly in the power and fertilizer sectors. For instance, the average plant load factor (PLF) of gas-based power plants has declined from 66% in FY11 to 59% in FY12. A key input in realizing the potential for Shale gas is the supporting manufacturing industry which will feed to the Oilfield services and one of the major cost segments is OCTG. Currently Indian OCTG market is a major export market for Low cost high quality OCTG. Supported by abundant feedstock as well as low labor cost, many major manufacturers such as Welspun, Maharashtra Seamless, OCTL etc. have good standing in the international markets as suppliers of low cost, good quality tubing and casing.