Shell ‘hits shale gas’ in China

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Anglo-Dutch supermajor Shell has found shale gas in China, marking the country’s first discovery of the resource that has transformed the US energy landscape, according to a report.

News wires  06 December 2011 11:29 GMT

An official with Shell’s partner PetroChina, a unit of state-owned China National Petroleum Corporation, said drilling results from two wells drilled by Shell had been positive.

“Shell has two vertical wells and they got very good primary production,” Professor Yuzhang Liu, vice president of PetroChina’s Research Institute of Petroleum Exploration and Development, told Reuters on the sidelines of the World Petroleum Congress (WPC) in Doha.

“It’s good news for shale gas,” said Liu, who regularly represents PetroChina at industry events around the world.

China currently has no commercial shale gas production and the inaugural find could cap imports in a market that natural gas producers are hoping will drive demand.

Some industry executives doubt the explosion of shale gas in the US could be replicated elsewhere due to difficult geology, the lack of water availability or land access issues.

Liu accepted the rock formations in China were “different” from those in the US but denied this meant they were more challenging or less bountiful.

In less than decade, shale gas has transformed the US from gas shortage to a point where companies are planning to export liquefied natural gas, fundamentally altering the dynamics of the international gas market.

Many gas producers who were targeting the US for supplies were forced to rethink their plans and China, with its booming energy demand, was seen as the answer to their need for a new market.

A Chinese “shale gale”, as the revolution was termed in the US, could jeopardise that market too.

Shell declined to confirm the find but said in a statement:”Shell will complete drilling activities by the year end… as planned.”

Chief executive Peter Voser has previously said he has “great expectations” for Chinese shale but was cautious in his comments to the WPC on Tuesday.

“We are going through the exploration phase there and are exactly now analysing what potential is available now in China,” he told a news conference.

In 2009, PetroChina and Shell agreed jointly to evaluate shale gas reserves of the Fushun-Yongchuan block in the Sichuan basin.

Earlier this year, industry sources said Shell had started drilling two shale gas exploration wells in Fushun.

A US Energy Information Administration report in April said China had 1275 trillion cubic feet of technically recoverable shale gas resources – by far the largest in the world – followed by the US with 862 Tcf and Argentina with 774 Tcf.

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Posted on December 6, 2011, in China, Natural Gas, Shale Gas and tagged , , , , , , , . Bookmark the permalink. 2 Comments.

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