The government has so far failed to bring a single unit of shale or tight gas into production. As per official estimates, Pakistan has huge reservoirs of shale and tight gas. The US Energy Information Administration has estimated the shale gas reserves in Pakistan at 51 Trillion Cubic Feet (TCF), low BTU gas reserves of 2 TCF and that of tight gas at around 40 TCF which makes them larger than the existing natural gas reserves.
The shale gas exploration is highly technical and costly, therefore, in order to encourage its exploration, pilot projects are needed as well as huge foreign investment. The Ministry of Petroleum and Natural Resources has time and again stated that it will facilitate Exploration and Production (E&P) companies that wish to explore shale gas by granting special concessions through transparent process based on merit, the official said.
The officials of the Petroleum Ministry said that the government in 2012 approved a new exploration policy, with improved incentives, as compared to the 2009 policy. Even with the offer of higher prices for shale and tight gas to exploration companies, it is estimated that Pakistan would pay a maximum of $6.50/Btu for gas compared with $11/MMBtu for imported gas from Iran and $13/MMBtu from Turkmenistan and $18/MMBTU for Liquefied Natural Gas (LNG).
Giving salient features of the expected shale gas policy the source said: "Exploration and Production (E&P) companies will be offered 40-50 percent higher prices for the extracted gas compared with the $4.26/mmbtu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years would get 50 percent hike over the 2009 price and, if it takes more time, they will get only 40 percent hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years, instead of 30 in the 2009 policy".
When he was asked why the government has failed to explore these reservoirs, he stated that the country offers great potential in the oil and gas sector but the government was unable to facilitate the investors. He said that during the period the government focused on imported gas projects like Turkmenistan-Afghanistan-Pakistan-India (Tapi) and Iran-Pakistan gas pipelines, Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas but none of these projects have been completed as a result Pakistan at present is facing serious energy crisis.
Extraction of shale and tight gas is a real challenge, since the cost and effort involved in extracting tight gas is quite different from conventional methods, but it has been commercially extracted in many parts of the world now and there are some tried and tested methods, he maintained.
The first-ever tight gas Sales and Purchase Agreement was signed on November 13 last year in Islamabad for first production from a tight gas reservoir in Pakistan from Kirthar Block in Dadu, Sindh. The Kirthar Block is jointly owned by Polish Oil and Gas Company (PGNiG) and Pakistan Petroleum Limited (70%) and PPL (30%). If exploration and extraction is on schedule, SSGC will receive 30mmcfd gas into its system through two Kirthar Block wells.
For the implementation of this project, SSGC has been awarded a contract of Rs 235 million for the construction of 52-km pipeline from Kirthar Block's Rehman Gas Field which will be integrated into SSGC's system at Naing Valve Assembly through the Bhit Gas pipeline.
Apart from this, PPL in collaboration with ENI is set to start for the first time drilling of exploratory well in Sindh's deep sea in 2014. In this regard, around seven exploratory wells, eight appraisal wells, and 19 development wells have been planned for discovering shale and tight gas in Sindh in the next five years.
Tight gas reserves have also been identified in the existing development and production leases granted to various E&P companies operating in Pakistan. Main tight gas regions identified are Kirthar Foldbelt located in Dadu, Sindh, Sulaiman Foldbelt (located in Balochistan), Potohar region in Punjab and offshore areas near Karachi. Pakistan is also heavily dependent on natural gas for its energy needs. At present, the actual demand for gas is around 8 Billion Cubic Feet (BCFD) per day, while managed demand is hovering around 6 BCFD against total supply of 4.3 BCF.
To encourage investment in developing domestic shale gas, Pakistan has approved a new exploration policy with improved incentives as compared with its 2009 policy. Pakistan Petroleum is now inviting fresh bids to auction licenses to explore and develop several blocks in Dera Ismail Khan (Khyber Pakhtunkhwa), Badin (Sindh), Naushero Feroz (Sindh) and Jungshahi (Sindh).
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