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Natural Gas Pipeline Projects in India explained – How India is moving towards gas based economy?

Natural Gas Pipeline Projects in India explained – How India is moving towards gas based economy?

Relevance:

  • GS3 || Geography || Indian Economic Geography || Energy Resource

Why in the news?

Gas pipeline as an economic future of India

Background:

  • In February, 2020, the Union Government laid down plans for the expansion of India’s natural gas pipeline network.
  • At the India Energy Forum, in October, 2020, the government revealed the expansion of national gas grid to 34,500 km from the present 17,500 km.
  • It was accompanied by pricing reforms, as the government looks to promote gas as the low carbon fuel.

Natural gas and its use:

  • Natural gas is the cleanest fossil fuels among the available fossil fuels.
  • It is used as a feedstock in the manufacture of fertilizers, plastics and other commercially important organic chemicals as well as used as a fuel for electricity generation, heating purpose in industrial and commercial units.
  • Natural gas is also used for cooking in domestic households and a transportation fuel for vehicles.

Distribution of natural gas in India:

  • Cuddalore district of Tamil Nadu, KG basin, Assam, Gulf of Khambhat, Barmer in Rajasthan etc.
  • New Pipelines:
    • Jagdishpur – Haldia/Bokaro – Dhamra Pipeline Project (JHBDPL) GAIL is executing this.
    • Phase-I of the project – from Phulpur to Dobhi (Gaya) with spur line to Varanasi, Patna, Gorakhpur &Barauni.
    • Government to provide 40% grant for this pipeline project under ‘Pradhan MantriUrja Ganga (PMUG) for Eastern India’.
    • This project will revive 3 Fertilizer Plants located at Gorakhpur, Barauni, and Sindri; and new Fertilizer Unit at Durgapur
  • Guwahati Pipeline project (BGPL)
    • Pipeline from Barauni to Guwahati is being implemented, toconnect North East Region (NER) with the National Gas Grid.
    • The entire project will cater to the energy demand of Eastern and North-Eastern Region covering six states, namely Uttar Pradesh, Bihar, Jharkhand, Odisha, West Bengal and Assam.
  • North East Region (NER) Gas Grid:
    • A joint venture of 5 oil and gas CPSEs, i.e., GAIL, IOCL, OIL, ONGC and NRL named as “Indradhanush Gas Grid Ltd” (IGGL), is developing trunk pipeline connectivity in all North Eastern States, in a phased manner.
    • Prime objective of these pipelines would be to transport the domestic natural gas produced in the north east states.
    • It shall also connect the NER grid to the National Gas Grid.
  • Kochi-Koottanad- Bangalore-Mangalore (Ph-II) Pipeline Project (KKBMPL)
    • Phase-I of pipeline has been commissioned and Phase-II is under progress in two sections.
    • Construction work by GAIL of Kochi-Koottanad- Mangalore Section, is under progress and expected to be commissioned shortly.
    • Work on other section is under progress.
  • Ennore-Thiruvallur-Bangalore-Nagapattinum– Madurai –
    • Tuticorin Natural gas pipeline (ETBNMTPL) IOCL is laying this pipeline.
    • This pipeline will connect new Ennore LNG Terminal with various demand centres in the region.

About One Nation, One Gas Grid:

  • The Indian power system is split into five regional grids for planning and operational purposes.
  • One Nation, One Gas Grid refers to the integration of several regional networks, resulting in the establishment of a National Grid for supplying natural gas-generated energy to various stakeholders including the federal government, state governments, the public and private sectors.

Need of such grid:

  • India is the biggest emitter of greenhouse gases after the US and China.
    • It aims to achieve the emission reduction targets pledged at the Paris Agreement, by promoting the use of natural gas and green fuel.
    • Gas = transition fuel, before switching to clean energy completely.
    • The government wants to raise the share of natural gas in primary energy basket to 15% by 2030.
    • At present, it is only 6.2%.
    • Global share = 23.4%
  • To achieve the targets set by the government, it is important to connect gas sources to consumption hubs. Presently, most of the gas pipelines are concentrated in the
  • Western and northern part of the country with a few lines in the east and south.

Geological condition for presence of natural gas:

  • Carbon molecules include marine organisms, from the simplest plankton and single-celled life forms to the more complex crustaceans and fish species. As these animals die and decay over millions of years, carbon molecules degrade into hydrocarbon compounds through heat and pressure processes (see figure below). Over time, adequate volumes of accumulations can shape oil and gas reservoirs.
  • Gas accumulates in a particular location if nature provides the following geologic conditions:
    • A source rock with ample organic matter that decomposes.
    • Reservoir rock of favourable permeability and porosity. Usually the best reservoirs linked by migration paths to the source rock are sedimentary rocks such as sandstones and some limestones. Porosity refers to the proportion of void space between the rock grains, and permeability measures the fluid’s ability to move through the rock.
    • The appearance, typically above the reservoir rock, of a rock formation or substrate that has low permeability, thereby sealing the reservoir and preventing the gas from escaping. These cap rocks are typically shales, salts, and clay.
    • The presence of a trap or peculiar geological/geometric structure that prevents gas from laterally leaking.
    • Oil will settle above the water layer because of density differences, and gas, if present, will accumulate above the oil layer and concentrate in the highest part of the pit, creating a gas cap above the liquid layers.
    • Density also helps explain why if adequate conditions of porosity and permeability exist, oil and gas migrate to the highest point in a formation. Dissolved in the oil layers, natural gas components may also occur, separating on the surface when the pressure is reduced.

World Distribution of Natural Gas:

  • Russia: Russia has the world’s largest reserves of natural gas (1,680 Trillion Cubic Feet (tcf).
  • Europe:Dutch coast and the North Sea (off the coast of Norway) have proven reserves.
  • Africa: Central basin of Algeria and Niger Delta have proven reserves.
  • North America: The United States has proven reserves of 273 tcf of natural gas.
  • Middle East:In the Middle East, there is a huge gas opportunity associated with the major oil fields in the Arabian-Iranian basin.Iran and Qatar, behind Russia, have the world’s second and third largest natural gas reserves.
  • Asia: The largest gas field in Asia is in the North Sumatra basin of Indonesia.
  • OPEC – Organization of Petroleum Exporting Countries 12 member oil supply cartel-
    • Qatar, Indonesia, UAE, Libya, Algeria, Nigeria, Gabon and Angola joined Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, and later.
    • This party bargains with foreign oil firms in order to get a high profit margin.

Gas-based economy:

A gas-based economy is one in which gas is the primary commercial energy source in an economy’s energy mix.

  • Pricing and Affordability: Lower local gas output than projected, along with higher international LNG prices, has made the use of gas for power generation uneconomical, since it cannot compete with coal-based power generation at current domestic coal pricing.
  • Field data quality and availability: In India, poor data quality continues to be a barrier for policymakers as well as potential private sector investments.
  • Competition: The structure of the Indian gas market, with some elements liberalized and others regulated by the government, along with frequent government involvement in the form of numerous laws and regulations, has hampered competition and harmed the whole gas supply chain.
  • Gas Distribution Infrastructure: The northern and western areas have the most established pipeline networks. Gas transmission infrastructure and access are lacking in significant parts of the country.
  • Inadequate development on international gas pipelines: India has been exploring pipeline gas imports. Despite considerable debate about pipelines, no progress has been made on international pipes.
  • Reliance on Imports for Gas: India is the world’s fourth-largest LNG importer, with Qatar accounting for a major portion of that. India’s import dependency has grown as local energy output has fallen behind demand growth. As a result, India’s energy security has been a source of concern.

New Policy:

  • The Ministry of Petroleum and Natural Gas earlier released a draft city gas distribution policy.
  • It may be adopted by states, for speedy implementation of city gas distribution (CGD) networks.
  • Reduced road taxes, value-added tax (VAT) may also be offered for gas-driven vehicles. This will promote ease of doing business.

Pricing:

  • Government wants to ensure transparent pricing, and ease of transactions.
  • Earlier, the price of natural gas produced domestically was fixed by a formula that averages out rates in gas surplus nations such as Russia and the US.
  • The government has banned natural gas and coal-bed methane (CBM) producers from buying their own produce.
  • The government, on October 15, 2020, introduced reforms that give producers the freedom to discover the market price of gas through a standard e-bidding process.
  • The notification, also gives them the liberty to market or sell the gas produced to anyone, including affiliates.

Conclusion:

Energy demand of India is anticipated to grow faster than energy demand of all major economies, on the back of continuous robust economic growth. Consequently, India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from approx. 6per cent in 2019.Natural Gas consumption is forecasted to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040 from approx. 56 million tonnes in 2019. Therefore, India must act to set the oil and gas sector in order in the form of policy support for the sector to solve the problems and incentivize the private players to set up R&D facilities to solve technical problems.

Mains oriented question:

The Indian oil and gas industry is confronted with several problems. Discuss. What steps has the Indian government taken to address these issues? (200 words)