China Races to Develop Domestic Shale Gas Reserves

21 Apr

China has ambitious plans to develop domestic shale gas resources, says a special report in the Financial Times.

A recent EIA study found China has the world’s largest shale gas resources with an estimated 36.1 trillion cubic meters (tcm) of technically recoverable reserves.

The United States is second, with estimated shale gas reserves at 24.4 tcm.  Advances in drilling technology and rapid deployment has allowed the U.S. industry to grow at a voracious rate over the past few years.

China has been spending billions on foreign sources of energy, including liquefied natural gas, oil and coal resources, to satisfy growing demand.  It lags behind the United States in developing its own shale gas resources, but new activity suggests that may change.

In its 2011-2015 five-year plan, China has identified shale gas as a target for technological breakthroughs.  The National Energy Administration is building a new shale gas research center, and China has strengthened ties with the United States to leverage hydraulic fracturing and horizontal drilling technology that has helped revolutionize the U.S. gas sector in recent years.  China’s Ministry of Land and Resources (MLR) will soon hold its first auction of shale gas blocks, which will cover 18,000 square kilometers across four inland provinces.

Natural gas is a cleaner burning fuel than coal and is therefore becoming increasingly attractive in China, where coal imports have tripled.  The Chinese government has made increased energy efficiency a priority and is under international pressure to reduce its carbon emissions output – further increasing the appeal of natural gas.

China’s largest oil and gas company, China National Petroleum Corporation (CNPC), predicts overall gas production in China will triple to 300 billion cubic meters by 2030 up from 94 bcm in 2010, with unconventional gas sources, primarily shale gas, comprising about a fifth of that total.

Major global firms are bullish on shale gas potential in China.  Royal Dutch Shell, for example, is initiating 17 wells this year as a starting point.  “It’s too early to say that shale gas is a game-changer (in China) but I have great expectations,” said Shell CEO Peter Voser .  “If we are successful, we are aiming to spend $1 billion a year over the next five years on shale gas (in China).

Read our coverage of the EIA shale gas report


Tags: , , , , ,

Comments are closed.

%d bloggers like this: