Wednesday, April 1, 2015

ONGC's move to cut the cost

Oil and Natural Gas Corporation has come up with new tactical move to drive down the cost of production of oil and natural gas. ONGC plans to increase the competition in the FRACKING by bringing the new small players from Texas and North Dakota so, that it can reduce the dominance of major player in the sector like Schlumberger, Haliburton and Baker Hughes.

So, two question arise here
First, what is the fracking?
Second, How it affect the cost?

FRACKING or Hydraulic fracturing is a well-stimulation technique in which rock is fractured by a hydraulically pressurized liquid made of water, sand, and chemicals. Some hydraulic fractures form naturally—certain veins or dikes are examples. A high-pressure fluid (usually chemicals and sand suspended in water) is injected into a wellbore to create cracks in the deep-rock formations through which natural gaspetroleum, and brine will flow more freely. When the hydraulic pressure is removed from the well, small grains of hydraulic fracturing proppants (either sand or aluminium oxide) hold the fractures open.

This technique is very unconventional and very popular for shale gas production in North America. There are many small companies which are using this technique to produce the shale gas and ONGC is planning to attract them about the investment opportunities in India. Because its always beneficial for the customer to have competition in the market.

It’s always a matter of debate whether OPEC with conventional drilling or Shale gas producer with unconventional fracking is able to produce it at cheaper rate, But there are claims that shale producers have the upper hand. So, it may prove a great move to bring the small players and increase the competition.


This move depicts the Make In India initiative by govt. As we are opening up for the foreign investor and simplifying the business opportunities in India.