China’s Upcoming Shale Bonanza
By Wayne Ma and Isabella Steger
AP Photo/Keith Srakocic, File
A pair of workers stand behind the top of a pump where the hydraulic fracturing process in the Marcellus Shale layer to release natural gas was underway in Claysville, Pa.
Move over North America, another shale heavyweight producer is coming on the scene.
Royal Dutch Shell PLC has signed China’s first production-sharing contract with state-controlled China National Petroleum Corp., to explore, develop and produce shale gas in the Sichuan Basin, Dow Jones Newswires reports Wednesday. Details of the pact were not disclosed.
China currently produces next to zero shale gas, but aims to produce 6.5 billion cubic meters a year by 2015. In the meantime, Chinese companies have been heavy investors in North America’s shale gas assets as it acquires expertise to bring home. Foreign involvement in production-sharing has also been stymied by a lack of precedents showing how such a model would work.
According to Ernst Young, China’s entry into the shale gas landscape could transform the industry in coming years once its potential is unlocked. China currently has the world’s largest shale reserves, some 19% of global resources, says the company.
Foreign companies have already been partnering with Chinese companies to search for shale in the country, including Shell, BP PLC and Chevron Corp. In December, PetroChina Co. said its joint venture with Shell led to the discovery of shale in Sichuan province. In February, PetroChina also struck a deal to buy a stake in Shell’s shale asset in British Columbia, Canada, in order to gain experience in the exploration and development of the gas.
France’s Total SA has also reached a pre-agreement this month to search for and produce shale gas with China Petrochemical Corp., or Sinopec.
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