Shale Gas Will Have Multi Dimensional Effects On China Energy Sector

Release Date: 26-Oct-2012

China is basking in the glory of its recent world’s largest shale finds. With almost 25% more reserves than the United States, China is dreaming about an even bigger energy revolution than the one seen in America. If estimates are to be believed then this 1275 Trillion Cubic Feet of shale gas reserves found in China will last for about 300 years at the present rate of production and consumption. Since Chinese shale gas scenario is in its early years, the future is large and as of now looks promising. The practical production currently is zero, with a couple of experimental wells producing only 10,000 meters of gas per day but nothing substantial. Gas is considered as productive when it is in commercial quantities and can reap enough revenue to cover its costs. According to this definition, the production of shale gas in China is still some time away although, Sinopec has claimed that it will start commercial production by the end of this year. Shale gas will have multi dimensional effects for China’s future. Not only will the Chinese energy sector be affected but the world’s energy scenario will also change, as soon as China starts production.

Innumerable reports have suggested that China is sitting on the world’s largest technically recoverable shale gas reserve. Chinese shale gas estimates surpass even that of North America and will be sufficient for the next 60 years at the current Reserve to Production (R/P) ratio. In March 2012, China claimed to have found the world’s biggest shale gas reserve which, according to the Chinese resources ministry, is in the Sichuan province and holds upto 25.1 Trillion Cubic Meters or 886.3 Trillion Cubic Feet. The Tarim basin in the west is also rich in shale gas and is estimated to have about 389 tcf. Onshore shale gas is mainly in the Bohai Bay, Junggar, Tuha, Ordos and Quaidam basins and covers an approximate area of 25,000 square kilometers. In northern China, sea – land shale gas covers about 15,000 kilometers. But the biggest reserves lie under Chinese waters, about 75,000 kilometers in Southern, northern and the Tarim basin.

Although shale gas is still in exploratory phase in China being led by Sinopec, they plan to start production by 2013 and considerable production by 2015 with an aim of taking a major jump in 2020. Chinese government has even started twisting its own laws to encourage foreign shale gas E&P companies to partner with Chinese companies or even drill independently. One such deal has already been signed between China National Petroleum Corporation and Royal Dutch Shell to develop a shale gas block.

For more information visit  "China Shale Gas Market Analysis"

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