China Finds Shale Gas Challenging, Halves 2020 Output Target



Hess To Form MLP For North Dakota Oil, Gas Transport Assets
China halves the quantum of shale gas it expects to produce by 2020 after early exploration efforts to unlock the unconventional fuel proved challenging.

Reuters

BEIJING, Aug 7 (Reuters) - China has halved the quantum of shale gas it expects to produce by 2020 after early exploration efforts to unlock the unconventional fuel proved challenging, according to an industry website and a government source.

China, believed to hold the world's largest technically recoverable shale resources, is hoping to replicate the shale boom that has transformed the energy landscape of the United States.

About four years of early evaluations and drilling have so far yielded one large find - Fuling field - in the most prospective gas province of southwest Sichuan, but experts say the Fuling success is hard to repeat due to complex geology and high cost of production.

Citing Wu Xinxiong, the head of China's National Energy Administration, industry website www.cpnn.com.cn reported that China aims to pump 30 billion cubic metres (bcm) of shale gas by 2020, versus an earlier goal of 60-80 bcm mapped out in 2012.

"The previous targets were more of a vague prospect, a hope. 30 bcm is a more realistic goal," said a government source who was briefed on the new target.

The revision, which is pending government finalization, would be negative for oil service sector companies that were hoping to cash in on the major drilling activity needed to reach the earlier target.

"This is clearly negative for sentiment for some of the China oil service sector firms such as Anton Oilfield ," said Scott Darling, head of Asia Oil and Gas research of JPMorgan in Hong Kong. "This admission on shale gas reflects the challenges facing China's natural gas market."


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