PetroChina, Shell Start Drilling Shale Gas Well in Sichuan


Sichuan Province
(Click to Enlarge)

BEIJING (Dow Jones Newswires), Dec. 27, 2010

China's top listed gas producer PetroChina and energy major Shell have started drilling the first evaluation well at the Fushun shale gas block in Sichuan province, PetroChina's parent China National Petroleum Corp. said in an in-house newsletter Monday.

The move marks a milestone of the two companies' shale gas cooperation, 13 months after signing an agreement to jointly develop shale gas resources in the area.

Assessment work in the Fushun block that covers an area of approximately 4,000 square kilometers began in January this year.

Shale gas development in China lags far behind the U.S., where it's a major contributor to the energy mix.

China aims to raise the annual production capacity of shale gas to 15 billion-30 billion cubic meters by 2020.

Shale is a sedimentary rock composed of very small particles of clay, mud and sand. It has low permeability, which means it releases trapped gas very slowly, and can be expensive to develop.

Shell also has a joint venture with PetroChina for the Changbei natural gas field in Shaanxi province in northwestern China.

Copyright (c) 2010 Dow Jones & Company, Inc.

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