US Shale Energy Industry Sparks Bean Boom In India

The multi-billion dollar shale energy industry in the U.S. is indirectly triggering a massive rush to harvest guar beans in India, claimed a report by Reuters on Monday, as thousands of farmers seek to capitalise on what is now a key ingredient in the U.S. hydraulic fracturing process.

The multi-billion dollar shale energy industry in the U.S. is indirectly triggering a massive rush to harvest guar beans in India, claimed a report by Reuters on Monday, as thousands of farmers seek to capitalise on what is now a key ingredient in the U.S. hydraulic fracturing process.

According to Reuters, India presently produces more than 1 million metric tons of guar beans (or 80 percent of the world’s supply) each year, with the beans subsequently turned into other products – most notably guar gum.

Though the powder-like substance is conventionally used by the food industry in order to create products such as ice creams and sauces, shale energy companies has discovered another purpose for guar gum – as a polymer that will improve the viscosity of proppants, which are materials forced into shale fractures to enlarge them so that oil and gas can be extracted.

Energy investment banking firm Simmons & Company International estimates that U.S. energy firms may need nearly 300,000 metric tons of guar gum this year. Last year some U.S. firms even had to stop fracking due to a guar gum shortage in India, the investment banking firm added.

“The whole world got caught not ever thinking they would need as much guar as they do now,” said Wade Cowan, co-owner of West Texas Guar Inc., a company that supplies the powder to U.S. energy companies.

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[quote]”We’re out desperately trying to find more of this product to process for the market, because we could sell all we can find,” noted Jim O’Brien, chief executive officer of U.S. chemical maker Ashland Inc.[/quote]

But small-scale farmers in India may still struggle to meet the international demand for guar, as prices of guar seeds have soared by nearly ten folds over the last year.

“There is a shortage of seeds. Last year, good quality seeds were available at around 60 rupees ($1.08) a kilo but now, traders are demanding over 500 rupees per kilo for the same seed,” said Shyam Lal, a farmer based in the Churu district of Rajasthan.

David Lesar, CEO at U.S. market leader Halliburton, added that the higher prices for guar seeds in India were affecting hydraulic fracturing costs in the States.

[quote]”The problem with guar is it is probably the fastest-moving commodity price that I have ever seen,” Lesar said.[/quote]

Companies such as Vikas WSP, India’s largest producer of guar gum, though are taking advantage of rising guar prices in order to distribute free guar seeds to farmers in exchange for guaranteed returns.

According to Vikas’s chairman B.D. Agarwal, the company has given out more than 900 million rupees worth of guar seeds to 100,000 farmers such as Shivlal, a guar farmer who has made more than five times his usual seasonal income just by selling guar beans this year alone.

“Guar has changed my life,” said Shivlal. “Now, I have a concrete house and a color TV. Next season I will even try to grow guar on the roof.”