A Long Way to Go for China’s Shale Gas Production

Aug.19, 2014

Earlier this month, Wu Xinxiong, Director General of China's National Energy Bureau, said that shale gas production target in 2020 is reduced to 30 billion cubic meters. In contrast, the goal before the reduction was 60 billion to 80 billion cubic meters. While shale gas production target is significantly reduced, it is still very difficult for China to achieve this goal. Currently, China has only one large project to commercialize shale gas production, Sinopec gas field inFuling, Sichuan Province. Shale gas production in this state-owned enterprises is expected to be 5 billion to 10 billion cubic meters in 2016 and 2017 respectively, which is considered as China's most valuable shale gas field. Last year, all the China's shale gas production is only 200 million cubic meters, so it is hard to imagine how to achieve the 2020 target. Moreover, it is much more difficult to achieve 2015 production goal of 6.5 billion cubic meters.
When referring to shale gas, the cost is the key point. As we all know, hydraulic fracturing and horizontal drilling technology has already been evented for decades. U.S. shale gas has been able to achieve great prosperity - United States is now not only the world's largest natural gas producer, but also the largest hydrocarbon production country - because Americans find an efficient mining method.
China’s shale gas production cost is about four times than the United States. In other words, its costs are higher than the price of liquefied natural gas. Beijing will undoubtedly narrow the gap, but this in no way means that you can ensure that the conomic viability of economic viability exploitation in China. China's leaders seem to be more worried about how to help state-owned enterprises retain the best field, and ensure that these companies can develop their own expertise to make the profits in the hands of Chinese people. Sinopec is most proud of the fact that all of its production tools and equipment in Fuling are made in China.
China’s shale gas exploitation is faced with a situation that the mining cost is high while the price was artificially lowered. All this indicates that China's technocrats will not be able to achieve 2020 goals.
(Translated by www.chinainout.com)