Chinese buoyant about shale gas prospects

PetroChina drilling rig
Source: PetroChina website

According to Zhai Gangyi, a senior expert with China Geological Survey (CGS), China’s proven reserves of shale gas have exceeded 500 billion cubic meters, with Fuling field alone contributing over 38 billion cubic meters of proven shale gas reserves. Earlier estimates from the U.S. Energy Information Agency estimated Chinese shale gas at 1,115 trillion cubic metres estimated recoverable reserves.

In a separate development, a report published last week and released during a three-day international event – China Mining 2015 – said that China’s shale gas exploration and development technology has entered the early stages of large-scale development.

The report quoted China’s proven reserves of 106.8 billion cubic meters and stated that so far the country had spent 23 billion yuan for exploration and development of its major unconventional fields: Fuling, Changning, Weiyuan and Yanchang.

The reported set the expected annual shale gas output of 3.2 billion cubic meters. This is at odds with the number quoted by Zhai Gangyi who put the combined output capacity from the four top-producing areas listed above at 6 billion cubic meters per year.

The report also said the shale gas resource was rich and widespread in China with huge potential for commercialization. While the current production concentrates only on the four key areas, with the Fuling field being the most prolific, in the years 2009-2013 the Chinese Ministry of Land and Resources spent 660 million yuan on evaluating potential resource in 41 basins and regions.

As production grows, Chinese explorers get to grips with the technology – adjusting it to the difficult Chinese geology and arid conditions in the producing areas – increasing the efficiency and lowering the costs of drilling, which at present is between $11.3 million and $12.9 million per well, according to China National Petroleum Corporation’s Economics and Technology Research Institute. This is, however, still considerably more than exploration costs in the U.S., with an average cost of a shale well in the Marcellus formation at around $7.6 million.

Sources: Natural Gas Asia, China Daily

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