INTERVIEW: Transcontinental Energy says time is ripe for foray into India's upstream sector

India's upstream sector policy reforms, along with its unwavering focus on the oil and gas industry, are expected to help expand the footprint of the unconventional hydrocarbons sector in the country's energy mix in the coming years, the chief executive officer of US-based Transcontinental Energy Services said.

Rahul Patel told Platts that TCES is making a foray into the Indian market as New Delhi reforms some of its decades-old upstream policies to make the sector more attractive to global participants. These changes are expected to enable unconventional hydrocarbons to help fill the gap resulting from a lack of major oil and gas discoveries. Platts is part of S&P Global Commodity Insights.

"The lack of adequate oil and gas production makes India net hydrocarbons import-dependent, with staggering foreign exchange outflows," Patel said in the interview. "With a favorable policy ecosystem, we envisage a massive expansion of the E&P sector to mitigate imports over the next 25 years. We also envisage that a key part of this growth will come from unconventional resources."

On Dec. 3, the Parliament's upper house, Rajya Sabha, passed a bill seeking to amend the Oil Fields (Regulation and Development) Act of 1948. The amendment aims to expand the scope of the act to include shale oil, shale gas and coalbed methane, in addition to oil and gas, while proposing a series of other changes to the decades-old act -- such as granting freedom to pursue international arbitration in the event of disputes and offering a longer lease period. The amendment still requires approval in the lower house of the Parliament, the Lok Sabha, to become law.

"One of the major issues historically slowing down activities was slow clearance and issues with land acquisition, which have been significantly mitigated now," Patel said. "In this regard, we are also looking forward eagerly to the proposed reforms in the Oil Fields (Regulation and Development) Act, which has some extremely beneficial changes over the vintage act, and which I am sure will radicalize investor attention."

He estimated that India could be holding CBM reserves of about 92 Tcf as well as a similar amount of shale gas.

Key policies

India recently launched the 10th round of the Open Acreage Licensing Policy (OALP X), marking the largest bid round by acreage offered, including 25 blocks covering an area of 191,986 sq km across 13 sedimentary basins. Six of these blocks are located in shallow water, six on land, one in deepwater and the remaining in ultra-deepwater areas.

"Technology interventions in Category I basins will aid in their enhanced recovery, and this will be a major area of focus going forward," Patel said.

However, upstream sector investors might still seek additional policy support, such as fast-tracking infrastructure to ensure fields are no longer stranded.

"Also, unlike western markets, there is an inherent lack of interest among Indian bankers and investment houses in Indian E&P. [This] can be facilitated by adopting models such as reserve-based lending," Patel added.

TCES is a full-service completion and production company specializing in flowback, well testing, chemical blending services, torque and test, mega hydraulic fracturing, well-servicing rigs, data acquisition, and stick pipe and coil tubing drill outs.

Patel said India is expected to remain one of the world's energy hot spots, with a double-digit compound annual growth rate in energy consumption over the coming decades. In India, hydrocarbons -- coal, oil and gas -- account for more than 80% of the energy mix, with oil and gas alone contributing 35%.

"We have closely seen unconventional hydrocarbon developments transforming the US to a net exporter, and we want to bring this technology and learnings to the Indian upstream sector," Patel said.

"Due to India's prolific coal reserves, CBM is a key area of focus and has immense growth potential. So, we decided to tap this market by acquiring two prime CBM blocks in India in the South Rewa basin of the Central Indian Gondwana coal belt," he said.

Stumbling block

Patel said a lack of any major discovery since the Mumbai High in the 1970s remains a major concern.

"I personally feel that the bigger concern remains the lack of enough exploration data in the country, which clubbed with advanced technological tools, like AI and analogue mapping from global examples, may be game changers," Patel said.

"Although there are data-related challenges, the opening up of eastern India deep and ultra-deep offshore could be the next Mumbai High. We are keenly looking at this basin and we are contemplating a foray with an expert global upstream company with us," he said.

Patel said the global upstream landscape is expected to experience robust growth over the next 25 years.

"The non-fossil energy sources will continue to grow but there is simply no switch for immediate transition," he said.

"Upstream operators and stakeholders have to be more responsible to decarbonize the operations," Patel said. "The upstream sector is the best benefactor to a transitional role by adopting various low-carbon technologies."