Shell to Finalize Sichuan Shale Gas Contract With PetroChina
Europe’s biggest oil company, Royal Dutch Shell Plc, aims to sign a production sharing contract with PetroChina Co. on developing a shale natural gas project in Sichuan province soon, said the manager of the venture.
“We hope to sign the PSC, or production sharing contract, as quickly as possible and then we will start drilling the wells,” Claudia Hackbarth, Fushun venture manager at Shell China Exploration and Production Co., said in an interview in Shanghai yesterday, without giving a timetable. A deal will finalize a previous joint assessment agreement
Chinese oil companies are partnering with foreign partners including Shell and Chevron Corp. to tap unconventional gas resources to help cut reliance on oil and coal. Shell may invest $1 billion a year in China should PetroChina’s two wells in Sichuan province show potential for commercial gas production, Chief Financial Officer Simon Henry said last month.
“Shell sees China as huge potential for growth and looks forward to forming numerous projects to co-develop the natural resources,” Hackbarth said.
PetroChina, the nation’s largest oil company, has started drilling two of its own shale exploration wells in Sichuan province, according to Shell’s Hackbarth. The two companies last year signed a joint shale-gas assessment agreement for the Funshun-Yongchuan block in Sichuan.
Under the joint assessment agreement, Shell studied data, made well proposals and are preparing to drill, said Hackbarth.
“We were given some very old wells to study and they have positive signs,” she said. “Once we verify the resources are there then we can begin to understand the cost and difficulties of producing it. Everybody has seen favorable signs of shale gas in China but there is a lot of work to do to confirm it.”
Unconventional Output
Shell’s other gas exploration venture in mainland China is the Changbei field in Shaanxi province, which produces 3 billion cubic meters of gas annually, Shell’s Henry said last month.
China’s unconventional gas output, including shale gas and coal bed methane, will rise to 15 billion cubic meters by 2015 and 50 billion cubic meters by 2030, based on the government’s estimates, Tony Regan, principal consultant with Tri-Zen International Ltd., said in Shanghai yesterday.
“The targets are conservative and we can easily see 100 billion cubic meters a year by 2030,” Regan said. “We see a really strong commitment from China in shale gas in the coming years.”
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