China's shale gas ramp-up may surprise skeptics

June 16, 2014

China's shale gas ramp-up may surprise the skeptics, Reuters reports. According to the agency, Beijing wants drillers to grow output from a standing start to a third of current U.S. levels – around 270 billion cubic meters (bcm) annually – by 2020. That’s a stretch. But on plausible assumptions, the People's Republic could get there within a decade. New discoveries and further joint ventures with the likes of Texas-based FTS International would help.

The development of vast domestic shale resources has taken on fresh urgency as China attempts to shift power generation away from smog-producing coal towards cleaner-burning natural gas. The International Energy agency expects Chinese gas demand to nearly double to 315 bcm a year by the end of this decade. Shale could account for between a fifth and a third of that if drillers hit a government target of 60-100 bcm of production by 2020.

State-backed petroleum giants Sinopec and PetroChina increasingly appear on track to reach an initial goal of 6.5 bcm of shale production by 2015. But from there, they would have to turn up production by an aggressive 65 percent per year to hit the mid-point of Beijing's longer-term target.
That would be almost double the 37 percent annual production growth their American counterparts managed as U.S. fracking took off between 2005 and 2010. And they didn't have to contend with China's mountainous terrain, water shortages and underdeveloped infrastructure.

Copyright, Reuters, 2014.