China sees shale output soar

New data from Beijing have shown that China recorded a 50.4% year-on-year increase in shale gas output for March, with the country producing a total of 1.15 bcm.

Overall gas output also grew, to 13.6 bcm, during the month, marking an increase of 8.2% on January and February, largely owing to greater economic activity on the back of infrastructure spending. Meanwhile, for the first quarter of the year, shale gas output rose by 17.4% to 2.67 bcm. 

This year Beijing said that it planned to raise its proven reserves of shale gas by over 1.5 tcm by 2020, at which point it is aiming to produce around 30 bcm per year from shale formations.

Despite being thought to hold the largest shale gas reserves in the world, China has struggled for years to capitalise on the resource, even as demand for gas has grown as the country has also grappled with continuing pollution. This has largely been down to a lack of technology, limited infrastructure and complicated geology. Many of China’s shale plays are located at considerably greater depths than those found in North America. Access to stable supplies of water for hydraulic fracturing is also a challenge in a country regularly facing droughts.

However, it looks like considerable progress is now being made. In a further boost to the industry, China’s largest shale gas producer, Sinopec, is set to begin production from its Nanchuan shale gas block next month. This comprises the second phase of Sinopec’s Fuling project. It is estimated that Fuling holds roughly 380.6 bcm of proven and probable (2P) shale gas reserves.

Sinopec said that it had managed to cut its well costs from 100 million yuan (US$14.5 million) per well to 70 million yuan (US$10.2 million) per well owing to improvements in efficiency and technology, as well as economies of scale.