The Obama administration on Tuesday confirmed that a major bilateral initiative for shale gas exploration in India was set to make important advances over the coming months.

At a briefing on the Global Shale Gas Initiative Conference here in Washington David Goldwyn, the administration’s Coordinator for International Energy Affairs, said, “Coincident with Prime Minister [Manmohan] Singh’s visit to the United States, we launched a memorandum of understanding with India on shale gas. And we have proposed... that the U.S. Geological Survey [USGS] do a resource assessment of certain shale basins in India.”

Noting that such joint shale gas exploration exercises would fall within the purview of the umbrella of cooperation under the U.S.-India Strategic Dialogue, Mr. Goldwyn however cautioned that the very same shale sites that were producing gas now were uneconomic because of the technology even six or seven years ago and in that regard, he said, “it’s new for India also.”

When asked whether the India-U.S. discussions touched upon the fact that shale extraction techniques could be endanger aquifers and groundwater Mr. Goldwyn said that safe water and safe regulation played a “huge part” in the discussions.

He said that while hundreds of thousands of wells had been drilled successfully in the U.S. thus far, the lesson that the U.S. wanted other countries like India to understand was that there had to be technically competent people operating the shale gas projects and “you have to have laws and regulations in place first.”

However Mr. Goldwyn also hinted that the U.S. might prefer that any shale gas obtained through such a joint initiative was not subsidised: “You have to have a market price, because if there isn’t a market price for natural gas, no one wants to produce that gas. No one will finance a pipeline, no one will produce a gas-gathering system to remove the impurities, and no one will purchase it on the end,” he said.

The administration also said that in its assessment of shale potential in India the USGS would employ sophisticated models which could that could use analogies to shale in the U.S. to project the “sweet spots", and the “most prolific places to drill".

However Mr. Goldwyn said that given the variability of shale across India, a rapid pace of source development would probably come only after successful explorations in the first basins. Thus, he said, further surveys by the USGS would not be completed in time for the auctions of shale leases in three Indian states planned for September 2011.

Mr. Goldwyn underscored the importance of Indian companies developing shale gas exploration and extraction technologies. He said, “Reliance has made an investment in a U.S. company to learn the technology.”

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