Bloomberg News

China Seeks ‘Breakthroughs’ in Developing Shale-Gas Resources

March 13, 2012

China, holder of the world’s biggest shale-gas resources, is gauging reserves and acquiring exploration expertise as it seeks “breakthroughs” in developing the unconventional fuel in the 10 years ending 2025.

The foundation for using gas found in shale formations will be laid by 2015, Liu Tienan, head of the National Energy Administration, said in Beijing today while attending a session of the Chinese People’s Political Consultative Conference, the country’s top political advisory body.

China, which has yet to produce shale gas commercially, aims to triple the use of natural gas by 2020 to 10 percent of energy consumption to curb pollution. The country plans to start developing shale-gas resources by 2015, and accelerate its extraction by the end of the decade, the Ministry of Land and Resources said on March 1.

PetroChina Co. (857), the country’s largest energy producer, has opened a few wells in southwestern Sichuan province and output has been “OK,” said Liu, who is also vice chairman of the National Development & Reform Commission, China’s top economic planning agency.

China began shale-gas exploration in December 2009 by drilling the first well, Wei 201, in Sichuan, China National Petroleum Corp., the parent of Hong Kong-listed PetroChina, said on July 19. CNPC agreed in June to form a venture with Royal Dutch Shell Plc (RDSA) to improve its drilling efficiency after taking 11 months to complete the country’s first shale well.

The nation needs to boost cooperation with foreign companies to develop its unconventional gas resources, Liu was cited by CNPC in July as saying. Cnooc Ltd. (883), China’s biggest offshore energy explorer, plans to increase investments in North American shale projects to acquire technology to develop domestic fields, Chairman Wang Yilin said on March 5.

Shale-Gas Auctions

China plans to produce 6.5 billion cubic meters a year by 2015, and 80 billion by 2020, Zhang Dawei, deputy head of the Strategic Research Center at the land ministry, said in October, citing a draft of a national program.

The government will hold one or two auctions of shale-gas blocks this year, the land ministry said on March 1, without giving details. China Petroleum & Chemical Corp. (386) and Henan Provincial Coal Seam Gas Development and Utilization Co. won the rights in June to explore two areas.

Sinopec, as China Petroleum is known, recorded a “high” industrial flow rate of shale gas at a test well at its Yuanba field in Sichuan, parent China Petrochemical Corp. said on March 8. The well produced 507,000 cubic meters a day, it said.

China’s shale formations may hold 1,275 trillion cubic feet (36 trillion cubic meters) of technically recoverable gas, or 12 times its conventional gas deposits, the U.S. Energy Information Administration said in April last year.

To contact Bloomberg News staff for this story: Bloomberg News in Beijing at dzhang14@bloomberg.net

To contact the editor responsible for this story: Shiyin Chen at schen37@bloomberg.net


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