Last Updated : 03 August 2012 at 13:20 IST
With India's Ministry of Petroleum and Natural Gas uploading its 'policy on Shale gas exploration and exploitation in India' for comments, the hopes of guar gum traders may have gone up considerably.
Guar gum, a derivative of Guar Seed is widely used in fracking, the process by which shale gas and oil are exploited. The guar component proppants widen the shale fractures and help extract oil and gas. It also dampens the friction and thereby enhance process efficiency.
To this day, the US has been in the forefront of Shale gas exploitation. The US reserves of Shale Gas has been estimated anywhere near 827 trillion cubic feet even as Indian estimates of Shale gas stand at a modest 527 trillion cubic feet.
Reuters quoting US sources have put forth that US may need 300,000 metric tons of guar gum this year. India produces about 1 million tons of guar beans on an annual basis and exports close to 400,000 metric tons of guar products; guar gum inclusive.
Given the intensity of demand signal from US, guar prices have reached stratospheric levels to the effect that India banned the futures in guar gum and guar seed.
From Rs.60 to Rs.500 a kilo in a short span is dizzying! No wonder that likes of Halliburton and Schlumberger are focusing on alternatives to guar.
Halliburton puts forth its "CleanStim" technology as an alternative while Schlumberger (SLB.N) depicts "HiWay," which it says will cut back on the water and sand use in fracking.
India, given its technological limitations have signed MoUs with the US government in exploiting shale gas reserves in the sub-continent.
At this stage, it is unclear if the MoUs include transfer of technology or other measures that may substitute guar gum with alternatives.
It is also unclear whether the farmers who are about to plant 4 million hectares of Guar in states of Rajasthan are aware of the challenges posed by technology.
Typically, more questions than answers.
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