Ful­ing field to reach an­nual out­put of 10 bil­lion cu­bic me­ters by end of year

China Daily (Hong Kong) - - BUSINESS - By ZHENG XIN zhengxin@chi­nadaily.com.cn

China Petroleum and Chem­i­cal Corp, the world’s largest re­finer, has vowed to dou­ble its an­nual nat­u­ral gas out­put by 2020 to reach 40 bil­lion cu­bic me­ters.

The com­pany, also known as Sinopec, said its Ful­ing shale gas field, China’s first shale gas com­mer­cial pro­duc­tion pro­gram launched in 2014, will reach an an­nual out­put of up to 10 bil­lion cu m by the end of this year.

Proven ge­o­log­i­cal re­serves of shale gas at Ful­ing have ex­ceeded 600 bil­lion cu m, af­ter the dis­cov­ery of more than 220 bil­lion cu m in ad­di­tional de­posits this month.

Sinopec’s nat­u­ral gas out­put in­creased 4.3 per­cent year-onyear in 2016, and it has pledged to fur­ther de­velop its re­sources in Sichuan as well as in Er­dos in the In­ner Mon­go­lia au­ton­o­mous re­gion.

An­a­lysts said Sinopec’s ef­forts are in ac­cor­dance with China’s am­bi­tious goal to wean it­self off coal, bet­ting big on a shale gas boom to de­crease its de­pen­dency on coal and for­eign gas im­ports.

Wang Lu, an Asia-Pa­cific oil and gas an­a­lyst at Bloomberg In­tel­li­gence, said China’s ag­gres­sive shale gas de­vel­op­ment tar­get may boost the share of gas in its en­ergy mix.

“Sinopec’s Ful­ing project will play a lead­ing role in achiev­ing China’s goal of pro­duc­ing 80 to 100 bil­lion cu m in 2030,” she said.

“Its shale gas pro­duc­tion may con­trib­ute about 4 to 5 per­cent of China’s to­tal gas con­sump­tion by 2020, and Sinopec can also strengthen its up­stream unit, which is weaker than its do­mes­tic com­peti­tors PetroChina and CNOOC, by de­vel­op­ing shale gas.”

Ac­cord­ing to S&P Global Platts, a provider of en­ergy and com­modi­ties in­for­ma­tion, China’s liq­ue­fied nat­u­ral gas im­ports in the first five months in 2017 surged 38 per­cent year-on-year to 12.88 mil­lion met­ric tons, as pol­lu­tion con­cerns spurred greater gas us­age.

The Chi­nese gov­ern­ment an­nounced in its 13th FiveYear Plan (2016-20) for nat­u­ral gas that it is keen to pro­mote gas us­age in the coun­try and plans to raise the pro­por­tion of nat­u­ral gas in the en­ergy con­sump­tion mix to around 10 per­cent by 2020 from around 5.9 per­cent in 2015.

Nat­u­ral gas im­ports will play an in­creas­ingly im­por­tant role in the coun­try’s en­ergy mix, es­pe­cially for coastal re­gions which are far from pipe­lines and do­mes­tic gas fields, it said.

Wang said China’s shale gas re­sources could be as much as 21.8 tril­lion cu m, but tech­no­log­i­cal and ge­o­log­i­cal chal­lenges may slow the de­vel­op­ment of the un­con­ven­tional gas.

In ad­di­tion, low­ered shale­gas sub­si­dies may also dis­cour­age de­vel­op­ers, while am­ple sup­ply from do­mes­tic

Sinopec’s Ful­ing project will play a lead­ing role in achiev­ing China’s goal of pro­duc­ing 80 to 100 bil­lion cu­bic me­ters in 2030.” Wang Lu, an Asia-Pa­cific oil and gas an­a­lyst at Bloomberg In­tel­li­gence

con­ven­tional gas, LNG, pipe­line im­ports, and cheap oil might also im­pede shale gas de­vel­op­ment, she said.

Li Li, en­ergy re­search di­rec­tor at ICIS China, a con­sult­ing com­pany that pro­vides anal­y­sis of China’s en­ergy mar­ket, said the tech­no­log­i­cal chal­lenge is one of the most sig­nif­i­cant fac­tors damp­en­ing China’s shale gas ex­plo­ration.

Li said de­spite be­ing the third coun­try that has suc­cess­fully com­mer­cial­ized shale gas and the sec­tor might be­come a grow­ing fac­tor, China is cur­rently far in­fe­rior to the US in shale gas com­mer­cial­iza­tion mostly due to tech­no­log­i­cal chal­lenges.

Chances are low that China be­comes the next shale gas su­per­power in the near fu­ture, and the cool­ing of the en­thu­si­asm that for­eign com­pa­nies had for Chi­nese shale gas

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