China Develops Fracking Technology to Exploit Shale Gas

Workers inspect equipment at a shale gas field of Sinopec in Fuling, Chongqing, China November 2, 2017. Picture taken November 2, 2017. REUTERS/Stringer

Reuters reports China’s independent development of fracking technology to exploit shale gas in its report “Breakingviews – China’s homegrown shale is worth the bother” on June 27, which is reblogged below:

Breakingviews – China’s homegrown shale is worth the bother

Clara Ferreira-Marques June 27, 2018

SINGAPORE (Reuters Breakingviews) – China’s shale gas push is a fully justified insurance policy. The People’s Republic produces a fraction of U.S. output: its fracking spurt started later, terrain is rough and wells deep. Yet fast-improving domestic technology and state support are helping push output up and costs down. With trade tensions rising, Beijing’s hedge is worth the effort.

China has one of the world’s largest shale gas resources, and is one of very few countries producing it commercially outside North America. Yet output was just 9 billion cubic metres (bcm), or 318 billion cubic feet, last year – largely from Sinopec’s Fuling field in Sichuan – amounting to less than 4 percent of rapidly rising annual demand. That’s meagre even if output nearly doubles, as forecast by Wood Mackenzie analysts, to 17 bcm by 2020. Such a level would only put it at roughly where the United States was in 2005, when shale took off.

In almost everything, though, the two experiences differ. Chinese wells are in mountainous, arid and often populous areas – a problem, given water is required for hydraulic fracking, and more is needed for deep formations. Deposits are structurally more complex. State players, and not innovative ‘wildcat’ operators, lead the way; Western majors are virtually absent and pipeline infrastructure is poor.

Strategic considerations nevertheless make the effort worthwhile, even just to offset rising overseas purchases. China currently imports roughly 40 percent of its gas needs, including liquefied natural gas (LNG) and pipeline gas from central Asia. While the United States is not a key supplier, heightened trade tensions will underline the need to diversify.

In any case, Chinese shale costs should fall. Technology has transformed shale before, and homegrown innovation, combined with a local supplier base, is already helping here. The cost of building a well has nearly halved over the past 8 years. Firms are also catching up with techniques to boost efficiency, like drilling multiple wells at a single pad.

There is also ample state support in the form of generous subsidies and tax cuts. That’s a powerful driver, at least while Beijing supports gas over, say, renewables. It may not be a Permian boom with Chinese characteristics yet, but options are valuable too.

Source: Reuters “Breakingviews – China’s homegrown shale is worth the bother”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China shale gas output to nearly double over three years: consultancy

Reuters Staff April 17, 2018

BEIJING (Reuters) – China’s shale gas production will likely reach 17 billion cubic meters (bcm) in 2020, nearly double the 2017 level, as local oil companies make big progress with drilling technology and cost cutting, consultancy Wood Mackenzie said in a note on Tuesday.

Nearly 700 new wells will come onstream between 2018 and 2020 at three key projects – Sinopec’s Fuling, and PetroChina’s Changning-Weiyuan and Zhaotong – all located in the country’s southwest, and at a total cost of $5.5 billion, Woodmac estimated.

The forecast 17 bcm of output in 2020 falls short of Beijing’s goal of 30 bcm, which was slashed by more than half from the government’s initial target set in 2012.

That means the world’s No.3 gas user will need to keep its imports of liquefied natural gas (LNG) at elevated levels. Woodmac has separately forecast China’s LNG imports will increase by a quarter to nearly 49 million tonnes this year, from record highs in 2017.

China produced 9 bcm of shale gas last year, or 6 percent of its total gas output.

“China is eager to materialize its shale gas potential to fuel its massive gasification initiative and support rising demand growth,” said Wood Mackenzie’s Tingyun Yang.

Despite estimates that China is home to the world’s largest recoverable shale gas resource, its shale formations tend to be deeper, more fractured and located in densely populated mountainous terrains, leading to higher costs and complications in drilling.

However, state firms have managed to reduce well costs significantly – by 40 percent for exploration wells versus 2010 and 25 percent for commercial wells versus 2014 – by deploying local service companies, home-manufactured equipment and improving drilling technologies, said Yang.

Explorations and joint studies by global majors such as Shell, BP, Exxon and Total at Chinese shale blocks have yielded little success.

Shell, which pledged billions of dollars of investment in China’s shale sector, pulled out of shale operations in Sichuan several years ago.

Reporting by Chen Aizhu; Editing by Mark Potter

Source: Reuters “China shale gas output to nearly double over three years: consultancy”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China Masters Shale Gas Exploitation Technology

CCTV says in its prime time news yesterday that China has mastered the technology to ensure stable production of shale gas in its shale gas field in Fuling, Chongqing.

The shale gas field has so far turned out 8.15 billion shale gas. China has thus joined the club of a few countries able to exploit shale gas on large commercial scale.

It is expected that China will enable the shale gas field to have the capacity of 10 billion cubic meters a year within the period of the 13th 5-year plan (2016-2020).

Source: CCTV “Stable production achieved at Fuling shale gas field” (summary by Chan Kai Yee based on the report in Chinese)