China to Unveil National Shale Gas Plan
China is considering unveiling a national shale gas plan that would include subsidies and auctions of new exploration blocks to encourage domestic companies to tap its resource.
“The government places high emphasis on developing shale gas and has been actively studying supporting policies,” said Zhang Dawei, deputy head of the Strategic Research Center at the Ministry of Land and Resources.
The subsidy for shale gas will be higher than the 0.2 yuan (3 cents) per cubic meter provided for coal-bed methane, because gas is harder to extract from shale rock, he said.
More than 10 shale gas blocks will be offered to Chinese state and private companies in the second round of auctions. While overseas companies will be barred from the sale to be held this quarter, they can invest in and supply technology to domestic operators.
Chinese shale may hold 1,275 trillion cubic feet (36 trillion cubic meters of gas), or 12 times the country’s conventional natural gas deposits, the U.S. Energy Information Administration said in April.
China’s “technically recoverable” reserves are almost 50 percent more than the 862 trillion cubic feet held by the U.S., the EIA said.
Estimates in 2010 pegged about 31 trillion cubic meters exploitable shale gas reserves in China, which will be updated by the end of this year as the government has done nationwide onshore appraisal, Zhang said.
China has yet to produce any shale gas commercially but plans for 6.5 billion cubic meters of annual output by 2015 and 80 billion cubic meters by 2020, he said.
Shale gas production in China is expected to increase to about 15 percent of domestic output by 2040, compared with 50 percent by 2030 in the U.S., Steven W. Lewis, a professor at the Baker Institute at Rice University, said at the conference. In Canada, shale may account for a third of overall gas production by mid 2030s, he added.
Cnooc Ltd. and China Petrochemical Corp. are seeking technology through overseas acquisitions. PetroChina Co.’s parent agreed in June to form a venture with Royal Dutch Shell to improve its drilling efficiency after taking 11 months to complete China’s first shale well.