China shale gas discoveries major boost to supply

Discussion in 'China' started by cir, Dec 8, 2011.

  1. cir

    cir Senior Member Senior Member

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    By ELAINE KURTENBACH, AP Business Writer – 58 minutes ago

    SHANGHAI (AP) — China is reporting discoveries of major shale gas reserves in its western Sichuan region, a development that could drastically boost its domestic supplies of natural gas and temper demand for imports.

    State-owned China National Petroleum Corp. has found shale gas reserves in at least 20 locations, with each able to produce over 10,000 cubic meters of gas per day, a company official confirmed Thursday.

    The official, who refused to allow his name to be cited because he said he is not a company spokesman, did not know what the future plans were for developing the reserves.

    Technologies that make it possible to free oil and gas from shale formations deep underground at less expense than in the past are helping relieve energy scarcity.

    But they are also generating concerns over the potential environmental costs of such extraction processes, which involve blasting chemical-laced water and sand deep into the ground — a process known as hydraulic fracturing, or "fracking." Critics fear the drilling liquids, which can contain carcinogens, could contaminate water supplies, either below ground, by spills, or in disposed wastewater.

    CNPC also reported in an online newsletter of the China Petroleum and Chemical Industry Federation, an industry group, that it had obtained good initial results in production from two exploratory shale gas wells.

    The wells, are part of an effort to gauge the extent of suspected shale gas reserves in Sichuan that, if commercially feasible, could relieve pressure for increased imports to meet soaring energy demand.

    The CNPC official did not say if the shale gas it succeeded in tapping was found just in blocks being developed by the company alone or also in blocks being explored along with Royal Dutch Shell PLC.

    "If Shell has succeeded in producing gas from the pilot wells drilled in the Fushun-Yongchuan block, that's a good sign in terms of the company's ability to overcome the technical and geological challenges of extraction," said Thomas Grieder, Asia-Pacific energy analyst at IHS World Markets Energy in Geneva.

    China's economic planning agency, the National Development and Reform Commission, initially reported progress on shale gas drilling in July.

    China has awarded exploration rights for shale gas in the Sichuan Basin as part of efforts to launch use of the clean-burning fuel.

    A CNPC technical report on its exploratory drilling for shale gas noted the need to comply with numerous environmental regulations and outlined various strategies for ensuring enough water supplies to conduct fracking.

    It noted the difficulties of exploiting shale gas in what are mostly heavily populated areas.

    China has so far not launched commercial shale gas operations but is partnering with Shell and other foreign companies seeking to improve its own technology. Chinese energy companies meanwhile have been investing in overseas reserves as part of their overall push to ensure access to crucial energy resources.

    The U.S. Energy Information Administration has estimated that China has about 36 trillion cubic meters (1,300 trillion cubic feet) of recoverable shale gas, the biggest known reserves. The U.S. has about 23.4 trillion cubic meters (827 trillion cubic feet)

    The Associated Press: China shale gas discoveries major boost to supply
     
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  3. cir

    cir Senior Member Senior Member

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    December 7, 2011 7:01 pm

    PetroChina finds shale gas reserves
    By Leslie Hook in Beijing

    PetroChina has discovered shale gas in China’s Sichuan province, confirming that the energy-hungry country is sitting on vast reserves of this unconventional fuel source.

    Shale gas, or natural gas trapped inside deposits of shale rock, is expected to transform China’s energy supply in future decades by providing a potentially cheap and plentiful new source of fuel for the world’s biggest energy consumer.

    PetroChina, the listed subsidiary of Chinese oil and gas producer CNPC, told the Financial Times it had drilled about 20 wells in its shale gas acreage in southern Sichuan province and that initial results had been positive. “The wells are producing more than 10,000 cu m of gas per well per day,” said Mao Zefeng, PetroChina senior assistant secretary to the board. “We are still assessing the exact size of the potential reserves.”

    Shale gas is produced by injecting wells with highly pressurised water and chemicals, a process known as “fracking” that cracks open rock to release natural gas. The technique has revolutionised energy markets in countries such the US, the world’s largest producer of shale gas, by driving down natural gas prices.

    China does not yet have any shale gas wells producing commercially, but several companies have exploratory projects underway, including Sinopec, PetroChina, Royal Dutch Shell, BP and Chevron. China has more shale gas reserves than any other country in the world, with 1,275tr cu ft of recoverable shale gas reserves, according to estimates from the US Energy Information Administration. That is enough to supply China for more than 300 years, based on current consumption levels.

    Beijing sees natural gas as a part of the solution for China’s growing energy needs, and the state has encouraged the development of “unconventional” natural gas sources such as shale gas and coal-bed methane. China’s shale gas production will eventually exceed that of the US, according to remarks by Fu Chengyu, chairman of Sinopec, at a conference on Wednesday.

    Gavin Thompson, head of China gas research for consultancy Wood Mackenzie, said the initial results in southern Sichuan suggest the acreage could be “comparable with attractive shale plays globally” once horizontal wells were drilled. Most of the wells drilled so far are vertical, and horizontal wells are underway, according to PetroChina.

    “These are quite crucial times for shale gas development in China,” he said. “If PetroChina or Sinopec has really good success over the next one to two years with their [shale gas] wells, we may see a much harder push to develop shale.”

    Despite the apparent resources, some analysts are sceptical about how soon China can make shale gas production profitable given the relatively low price of natural gas in China and the lack of pipeline infrastructure. Two geologists contacted by the FT said that 10,000 cu m per day was not large relative to onshore US fields, adding that production from shale gas wells declines rapidly over the lifetime of the well.

    PetroChina’s southern Sichuan shale acreage includes the Changning and Weiyuan blocks. On the nearby Fushun-Yongchuan block, a joint venture project between PetroChina and Shell has drilled several exploration wells for shale gas, at least one of which has gas production, according to media reports earlier this year. Shell declined to comment on the production of the block, saying that “exploration work is ongoing”.

    PetroChina finds shale gas reserves - FT.com
     
  4. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    If it was easy for China to extract, they would have done it by now and not rely on Shell to find it. They will have to frack and in the process destroy the last water supplies in Sichuan. There was so much damage with pollutants after the earthquake, the environment can't take it.
     
  5. cir

    cir Senior Member Senior Member

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    So Shell, BP and Chevron are all there for nothing.

    You must be a god-like genius who is more farsighted than the collective wisdom of Shell and company. :rofl:

    As for water, Sichuan's problem is there is too much of it.

    And yes yes, the US, being the largest shale gas producer in the world, has complete disregard for pollution.:taunt:
     
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  6. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Shell don't care if your water supply gets polluted. They think CCP is dumb enough to drill. :rofl:

    As for water, Sichaun's problem is not having enough of it clean.

    And yes yes, US hasn't polluted their water supply mining for it. CCP doesn't give a rats behind about it.
     
  7. Blackwater

    Blackwater Veteran Member Veteran Member

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    What is shale gas?????
     
  8. utubekhiladi

    utubekhiladi The Preacher Elite Member

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  9. cir

    cir Senior Member Senior Member

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    http://www.ibtimes.com/articles/265897/201...end-u-s-gas.htm


    Could Chinese Shale Mean the End of U.S. Shale Gas Boom?

    By Pierre Bertrand | December 12, 2011 5:47 PM EST

    China's natural gas industry is still developing, but already it is showing signs that worry some players in the U.S.

    Last week, Royal Dutch Shell and Chinese officials announced the company found shale gas in two wells in the Shichuan province, and that production was overall positive. That was coupled with reports that China's state-run PetroChina was producing more than 10,000 cubic meters of gas from 20 wells in the province, according to the Business Monitor International

    The news was met with some trepidation, fostering fears among U.S. players that a strong Chinese domestic natural gas industry will cut global demand for liquified natural gas and natural gas exports -- effectively killing the U.S. shale gas boom.

    IHS Global Insight, in a report published this month, expects a large portion of U.S. growth will depend on natural gas exploration and production. By 2035, the industry is expected to support 1.6 million jobs and bring in $231 billion to the country's GDP -- that's a 203.9 percent increase from last year.

    But John Felmy, chief economist with the American Petroleum Institute, said as long as the U.S. natural gas market remains isolated from the rest of the world, China's developing natural gas industry is unlikely to hurt the U.S

    Unlike the oil industry, which is linked extensively to the rest of the world, natural gas is less connected, he said. This protects the country's natural gas industry from foreign players like China, whose natural gas resources are believed to be larger, Felmy added.

    But if the U.S. starts trading more natural gas and establishes more connections with the Asian country, Felmy said he suspects analysts would worry that China could gain a productive advantage like it has done with other products it exports to the U.S., and that could come back to hurt the local natural gas industry.

    Andrew Snyder, editorial director of Insiders Stragety Group, a financial research firm based in Baltimore, said the U.S. is facing a natural gas glut and in trying to relieve it, the idea of exporting it to overseas markets is growing, and that includes China, the world's top energy consumer.

    But if China starts developing its own natural gas industry, the country will not need foreign imports, leaving the U.S. with increasing supply and nowhere to ship it. Snyder said he suspects natural gas prices are going to fall and keep falling as Chinese and European natural gas plays pick up speed. This invariably would slow the domestic natural gas boom seen in the U.S. Northeast, Northwest and Texas.

    "If we lose that, it's not going to be doom and gloom, but it's not the big boom people are expecting," Snyder said. "[The boom] is not going to be as euphoric as many people think."

    China by 2015 expects to produce 6.5 billion cubic meters, or 229.54 billion cubic feet of natural gas. That same year, Chinese government officials say the country will have roughly 7 trillion cubic feet of recoverable natural gas with an additional 35.3 trillion cubic feet in reserves, according to The China Perspective, an online Chinese financial news publication.

    The Center for American Progress, in a report published in October, said China has 1,300 trillion cubic feet of shale natural gas reserves, compared to 862 trillion cubic feet the U.S. has in reserves.

    "After a while, we are going to hit a saturation point," Snyder said, adding that natural gas in the in the U.S. would have to reflect the dropping prices.

    The U.S., however, can look to be ahead for a while longer. Given the amount of time it took the U.S. to start tapping into its shale deposits, Snyder believes that it won't be for another decade before China gets on the ball and taps into its own resources.
     
  10. Ray

    Ray The Chairman Defence Professionals Moderator

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    China has one aim - economic spiral.

    Environment is for the birds, if one goes by the way China sees it!
     
  11. Nagraj

    Nagraj Regular Member

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    double post......................
     
    Last edited: Dec 15, 2011
  12. Nagraj

    Nagraj Regular Member

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    When will we move!!!!

    8)Shale gas, not Iran pipeline, our energy hope

    External affairs minister S M Krishna visited Tehran in mid-May and said India was still interested in the proposed Iran-Pakistan-India (IPI) gas pipeline, but expressed reservations on security grounds. However, there is now a more important economic reason to oppose the pipeline.

    The IPI gas price has become ridiculously high in the light of new technology for extracting gas from shale, a common sedimentary rock found across the world. The IPI project never made sense from a security viewpoint. It now makes no sense from an economic viewpoint.The US has pioneered shale gas technology. This has created a glut, sending gas prices plummeting from $13/mmbtu (million British thermal units) four years ago to just $4/mmbtu today, even as the price of oil has more than doubled. By contrast, the IPI formula links the gas price to oil prices. This implies that India will have to pay $10/mmbtu at today’s oil price of $70/barrel, and a whopping $20/mmbtu for gas if oil returns to its 2008 peak of $150/barrel. India cannot possibly accept such a price formula when shale gas technology has sent prices plummeting.
    Shale gas, not Iran pipeline, our energy hope � Swaminomics


    I realise that my post is related to india not china....
    however there are few things china is doing right.
    as for people criticizing shale gas please understand that it's no more or no less polluting then other conventional sources of energy. we are falling behind in this race . we need to hurry :)

    our government remains asleep to the opportunities......
    Shale gas transforms geopolitics, energy � Swaminomics
     
    Last edited: Dec 15, 2011
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