Shale Gas Reserves Major for China
Associated Press
9 December 2011
SHANGHAI - China is reporting discoveries of major shale gas
reserves in its western Sichuan region, a development that could
drastically boost its domestic supplies of natural gas and temper
demand for imports.
State-owned China National Petroleum Corp. has found shale gas
reserves in at least 20 locations, with each able to produce over
10,000 cubic meters of gas per day, a company official confirmed
Thursday.
The official, who refused to allow his name to be cited because he
said he is not a company spokesman, did not know what the future
plans were for developing the reserves.
Technologies that make it possible to free oil and gas from shale
formations deep underground at less expense than in the past are
helping relieve energy scarcity.
But they are also generating concerns over the potential
environmental costs of such extraction processes, which involve
blasting chemical-laced water and sand deep into the ground - a
process known as hydraulic fracturing, or "fracking." Critics fear
the drilling liquids, which can contain carcinogens, could
contaminate water supplies, either below ground, by spills, or in
disposed wastewater.
CNPC also reported in an online newsletter of the China Petroleum
and Chemical Industry Federation, an industry group, that it had
obtained good initial results in production from two exploratory
shale gas wells.
The wells, are part of an effort to gauge the extent of suspected
shale gas reserves in Sichuan that, if commercially feasible,
could relieve pressure for increased imports to meet soaring
energy demand.
The CNPC official did not say if the shale gas it succeeded in
tapping was found just in blocks being developed by the company
alone or also in blocks being explored along with Royal Dutch
Shell PLC.
"If Shell has succeeded in producing gas from the pilot wells
drilled in the Fushun-Yongchuan block, that's a good sign in terms
of the company's ability to overcome the technical and geological
challenges of extraction," said Thomas Grieder, Asia-Pacific
energy analyst at IHS World Markets Energy in Geneva.
China's economic planning agency, the National Development and
Reform Commission, initially reported progress on shale gas
drilling in July.
China has awarded exploration rights for shale gas in the Sichuan
Basin as part of efforts to launch use of the clean-burning fuel.
A CNPC technical report on its exploratory drilling for shale gas
noted the need to comply with numerous environmental regulations
and outlined various strategies for ensuring enough water supplies
to conduct fracking.
It noted the difficulties of exploiting shale gas in what are
mostly heavily populated areas.
China has so far not launched commercial shale gas operations but
is partnering with Shell and other foreign companies seeking to
improve its own technology. Chinese energy companies meanwhile
have been investing in overseas reserves as part of their overall
push to ensure access to crucial energy resources.
The U.S. Energy Information Administration has estimated that
China has about 36 trillion cubic meters (1,300 trillion cubic
feet) of recoverable shale gas, the biggest known reserves. The
U.S. has about 23.4 trillion cubic meters (827 trillion cubic
feet).