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Big Chinese shale for Shell

22 March 2011

Shell aims to spend US$1 billion a year on shale gas in China over the next five years if its exploration works currently underway prove a success. The company is drilling 17 wells in China, including for tight gas and shale gas, in regions such as southwestern Sichuan, China’s most prolific gas province, Reuters reported.

Inspired by the massive success of unconventional gas – coalbed methane, tight gas and shale gas – in the US, China has over the past year embarked on an exploration campaign for shale gas, part of Beijing’s goal to boost use of cleaner-burning fuel and cut dirtier coal. “It’s too early to say that shale gas is game changer (in China) but I have great expectations. We are drilling 17 wells this year. That will give us a sense of magnitude of what’s available here,” Shell chief executive Peter Voser told Reuters.

China does not have any shale gas production yet, but has a rough target to pump some 10 per cent of its total gas output from shale gas by 2020. Voser declined to specify how many of the 17 wells were for shale gas. “If we are successful, we are aiming to spend $1 billion a year over the next five yeas on shale gas,” Voser said, adding that Shell was already spending $400 million on unconventional gas in China this year. Shell is already producing gas in Changbei, a tight gas field in Ordos basin in northern Shaanxi province.

Just a year ago, Shell and China National Petroleum Corporation signed a 30-year deal to develop another tight gas block "Jinqiu" in Sichuan province. Reuters also cited industry sources as saying Shell recently started drilling two shale gas exploration wells in Fushun Block, also in Sichuan province.

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