India readies for shift away from oil

Indian officials say they're laying pipelines that could lead to the emergence of an economy based on natural gas, instead of oil.

The shift could ease India's reliance on imported oil, as well as lessening the country's electricity shortages.

India imports 68 percent of its oil consumption, according to the U.S. Energy Information Administration. According to the World Bank, roughly 40 percent of residences in India
are without electricity, and blackouts are common in cities with access to the electric grid.

But Indian officials are enacting a plan that could use vast domestic reserves of natural gas to solve both problems. The EIA says that India had 38 trillion cubic feet of proven natural gas reserves as of January 2009. In 2007, India produced just 1.1 trillion cubic feet of natural gas and used 1.5 trillion cubic feet thanks to imports.

But the Business Standard reports that government officials now think the potential reserves are even larger: India has the potential to source at least 200 trillion cubic feet of gas from its East Coast alone.

The cross-country and intra-city pipelines could supply homes' gas turbines or fuel cell units, which would then produce hydrogen that could be used to fuel motorcycles. 

Further deployment of pipelines could mean city fleets and public transit could be powered by compressed natural gas, while vapor absorption chillers could be used to cool buildings.

New drivers of the market include Reliance Industries, which plans to produce 40 million cubic meters per day by July—the equivalent of 235,230 barrels of oil per day. That is expected to double to 80 million cubic meters by the end of 2009. And state-owned agencies Gujarat State Petroleum and Oil and Natural Gas (ONGC) reportedly have plans to each produce 40 million cubic meters per day by 2012.

The fertilizer sector accounts for 80 percent of the current demand, which is 200 million cubic meters per day, so any increase in production capacity is expected to make natural gas widely available for power-generating applications.

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