Bloomberg News

Shell Expects China’s Shale Gas Potential to Be ’Very Powerful’

February 07, 2012

Feb. 3 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, said China’s shale gas potential could prove to be “very powerful” and announced plans to step up drilling in the country.

Together with China National Petroleum Corp., Shell invested more than $400 million in Chinese shale gas projects last year that involved the drilling of 15 wells, Chief Financial Officer Simon Henry said. The partners plan to drill 20 to 25 wells this year.

“The quality of the wells has gone from the best they’ve ever had in China to a couple with disappointment,” Henry told reporters yesterday in London. “Overall we are a bit better than expected.”

Shell and CNPC last year agreed to boost energy cooperation in China, which is estimated to hold the world’s largest reserves of shale gas.

Chinese shale may hold 1,275 trillion cubic feet of technically recoverable gas, or 12 times the country’s conventional natural-gas deposits, according to a U.S. Energy Information Administration report published in April. China’s“technically recoverable” reserves are almost 50 percent more than the 862 trillion cubic feet held by the U.S., the EIA said.

China’s shale gas potential “could be very powerful,” Henry said. “We’ve got the same acreage in China that we have in North America,” the equivalent of about 3 million acres in each region, he said.

Shell will make a decision at the end of the year on whether to go ahead with the large-scale development of shale gas production facilities in China, the CFO said.

--With assistance from Benjamin Haas in New York. Editors: Stephen Cunningham, Joshua Fellman

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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