Chinese Shale Gas Resources Can Be Economically Exploited

Royal Dutch Shell sees a bright outlook for the Chinese shale gas sector and feels that country’s huge shale resources can be exploited at a relatively low cost.

Reuters citing Chief Financial Officer Simon Henry said that Shell had not yet determined the cost of producing shale gas in China but that it would probably be within the $2 to $6 per million British thermal units (Btu) seen in North America, a level that would be competitive with alternative gas sources.

Shell completed 11 wells last year and expects to double that this year. Results have ranged from poor to excellent.

Reuters quoted Henry as saying that it was more difficult to extract gas from Chinese reservoirs when compared with the US. However, he expects production costs to come down, making Chinese shale economic at the $5 to $6 per million Btu level that Shell receives for its current, conventional gas production in China, and well below liquefied natural gas (LNG) import prices of around $16 per million Btu.