With the booming U.S. industry players keeping a close eye out for the opening of global markets, India reported completing its first shale gas well Tuesday as some observers of the Indian energy space speculate that the nation may have its largest natural gas deposits locked in shale. U.S. oilfield services provider Schlumberger drilled India’s first well.

Nevertheless, representatives with various global energy giants are not sure that shale gas will be the transformative resource that it has proven to be in North America.

With natural gas now providing about 10% of India’s energy, analysts are predicting that gas demand will double in the next five years, although Schlumberger’s executive in charge of Asian services, Anil Swani, was quoted in a United Press International report as saying meaningful shale gas production is still probably five years away given the fact that its shale development in still in a pilot stage.

Under a memorandum of understanding (MOU) signed between the United States (U.S. Geological Survey) and India last November when President Obama visited the country, U.S. State Department and Indian officials are working on an initiative to launch shale gas development by the end of this year.

Swani has told business news media that India has more than 600 Tcf of shale gas deposits, which would indicate that shale holds more supplies than conventional gas deposits. That compares to an estimate of 16,000 Tcf of shale gas resources worldwide, according to a Schlumberger estimate published in a technical paper two years ago.

Getting at the Indian potential may prove more of a challenge than it has been in North America, given regulatory, geographic and demographic issues found in the subcontinent.

India’s national oil/gas governmental office, the Directorate General of Hydrocarbons (DGH), is pursuing domestic legislation that is supposed to usher in the first round of shale gas by the end of this year. DGH is the agency that is working with the U.S. State Department, but there are many regulatory hurdles and the fact that a lot of the shale gas deposits are found in heavily populated areas is another concern.

India-based executives with BP plc and Essar Oil have said the uncertainty surrounding the land masses needed in shale development will require a lot of local planning and development.

As it has been evolving for nearly 20 years, the North American shale gas industry is not a model for India, according to two Schlumberger executives, Smair Verma and Shubha Shanthamurthy, writing in a technical paper they published last November under the title, “Shale gas — expanding India’s gas frontier?”

“There are many significant differences between the U.S. model and conditions in India,” they wrote. “These differences need to be identified and incorporated into business models and regulations if shale gas is to transform India’s energy balance.”

Nevertheless, observers, such as Robert Clarke, who manages Wood Mackenzie’s unconventional gas service unit, have observed in recent months that there is an robust interest developing globally in shale gas based on the North American experience of the past five years (see Shale Daily, Nov. 3, 2010).

Clarke and others point out that Reliance Industries Ltd., India’s largest producer, already is getting some shale know-how through its joint ventures in the Marcellus (see Daily GPI, April 12, 2010) and Eagle Ford (see Daily GPI, June 25, 2010) shales. The Obama administration’s India-U.S. agreement includes the exchange of data and identification of shale gas basins, according to Indian officials.

“India is showing a keen interest in understanding the potential of its shale gas resources,” Clarke said last November just before Obama made his visit. “It is very early though, and many unknowns exist around reservoir quality and how easily exploration and development programs could be implemented.”