Chi­nese shale gas out­put to nearly dou­ble over 3 years

Global Times US Edition - - BIZMARKETS -

China’s shale gas pro­duc­tion will likely reach 17 bil­lion cu­bic me­ters (bcm) in 2020, nearly dou­ble the 2017 level, as lo­cal oil com­pa­nies make big progress with drilling tech­nol­ogy and cost cut­ting, Ed­in­burgh-based con­sul­tancy Wood Macken­zie said in a note on Tues­day.

Nearly 700 new wells will come on stream be­tween 2018 and 2020 at three key projects – Sinopec’s Ful­ing, and PetroChina’s Changn­ing-Weiyuan and Zhao­tong – all lo­cated in the coun­try’s south­west­ern re­gion, and at a to­tal cost of $5.5 bil­lion, Wood Macken­zie es­ti­mated.

The fore­cast 17 bcm of out­put for 2020 falls short of China’s goal of 30 bcm, which was slashed by more than half from the gov­ern­ment’s ini­tial tar­get set in 2012.

China pro­duced 9 bcm of shale gas last year, or 6 per­cent of its to­tal gas out­put.

“China is ea­ger to ma­te­ri­al­ize its shale gas po­ten­tial to fuel its mas­sive gasi­fi­ca­tion ini­tia­tive and sup­port ris­ing de­mand growth,” said Wood Macken­zie’s Tingyun Yang.

De­spite es­ti­mates that China is home to the world’s largest re­cov­er­able shale gas re­source, its shale for­ma­tions tend to be deeper, more frac­tured and lo­cated in densely pop­u­lated moun­tain­ous ter­rains, lead­ing to higher costs and com­pli­ca­tions in drilling.

How­ever, State firms have man­aged to re­duce well costs sig­nif­i­cantly – by 40 per­cent for ex­plo­ration wells ver­sus 2010 and 25 per­cent for com­mer­cial wells ver­sus 2014 – by de­ploy­ing lo­cal ser­vice com­pa­nies and home-man­u­fac­tured equip­ment, and im­prov­ing drilling tech­nolo­gies, said Yang.

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