Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on August 7, 2014
China Finds Shale Gas Challenging, Halves 2020 Output Target
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.”
It also means China would continue to focus on tapping easier-to-unlock gas resources, such as tight gas, which the Chinese oil firms are more experienced in, to reach a government-set total gas supply target of up to 420 bcm by 2020.
China’s tight gas output may hit 80 bcm by 2020, according to forecasts by the China Academy of Engineering, doubling its estimated output of 40 bcm in 2013.
The new 30 bcm shale gas target would mostly be contributed by the country’s top two state oil firms, PetroChina and Sinopec Corp, experts have said, as they hold the majority of the country’s oil and gas blocks, as well as the expertise.
The government’s efforts, led by the Ministry of Land and Resources, to open up the shale gas sector to independent players have had small success, as the blocks the ministry has to offer are of poorer quality and would entail hefty exploration costs.
Attempts by international firms to participate in the shale gas development have not been wholly fruitful either, with Royal Dutch Shell and Hess Corp the only foreign firms that have landed production sharing contracts, while most of them, including Exxon Mobil and BP, have barely progressed beyond the preliminary stage of studying the blocks.
– See more at: http://www.rigzone.com/news/oil_gas/a/134430/China_Finds_Shale_Gas_Challenging_Halves_2020_Output_Target/?all=HG2#sthash.D9dXJrER.dpuf
RIGZONE
3 Comments on "China Finds Shale Gas Challenging, Halves 2020 Output Target"
rockman on Thu, 7th Aug 2014 10:53 am
It always brings a smile to my face when anyone begins tossing out numbers on any play that has had virtually no testing to speak of yet. Just like all the speculations about how much oil we could be producing from the dozens of shale formations in the US. And after years and hundreds of $millions testing those formations more than 80% of the oil coming from shale is just from two formations. And ostensibly the US is the premier shale developer on the planet, controls most of the needed infrastructure and has a lot of readily available private lands to lease. And we still haven’t created a boom in any of the other oil shales.
Politicians just can’t resist tossing out great enthusiasm since they probably won’t be around when the reality kicks in.
Nony on Thu, 7th Aug 2014 12:41 pm
Sometimes they outperform expectations. Look at the Bakken and all the TOD posts and analyses talking it down. Or the Marcellus, consistently beating even the optimistic forecasts (to the extent that it was embarrassing).
A remark someone made elsewhere:
“…I’m a huge believer, as some of you know, in anecdotal [data points], and there were 2 interesting pieces of anecdotal [data points] that surfaced this week. The EIA said on Monday that Marcellus production will be at 15.5 billion Bcf per day in August, and they projected it will surpass Qatar’s gas production in September. Now Qatar is the world’s third-largest producer of natural gas. I think that gives you an idea of the extent of the production ramp-up that’s occurring in the Marcellus…”
Northwest Resident on Thu, 7th Aug 2014 12:47 pm
Nony — shale production is a little tiny blip on a big radar screen. Shale production is a fleeting moment in time and will soon pass. So what if shale production is “up” and trending upward right now. So is all the unpayable debt, net losses and environmental destruction that goes with it. But all that too shall soon fade into distant memory, just like shale oil production. I can never figure out why you are so hyped and so focused on such a tiny and insignificant (relatively speaking) source of oil production.