Shale exploration 'making great strides'

A shale gas facility in Fuling, Chongqing. As of July, about 20 billion yuan ($3.2 billion) had been invested to find and develop shale gas resources, mainly in the Sichuan Basin. CHINA DAILY

China has made great progress in shale gas exploration with about 400 wells drilled as of July, and production this year is estimated at 1.5 billion cubic meters, experts said on Wednesday.

As of July, about 20 billion yuan ($3.2 billion) had been invested to find and develop shale gas resources, mainly in the Sichuan Basin, according to the Ministry of Land and Resources. Shale gas reserves are expected to hit 500 bcm, distributed over 170,000 square kilometers, it said.

"To accelerate shale gas exploration, the ministry is preparing for the third shale gas auction and encouraging more private investors to enter the field," Che Changbo, deputy director of the ministry's geological exploration department, said at a news conference in Beijing.

China has held two auctions of shale blocks since 2011. Exploration rights for 21 blocks were awarded to oil companies and private investors.

Peng Qiming, director of the geological exploration department, said the winners had invested more than 2 billion yuan in exploring these blocks since 2013.

China is just beginning to mass-produce shale gas. Its initial goal of producing 60 to 100 bcm annually by 2020 has been cut to 30 bcm, according to the ministry.

"China aims to pump at least 30 billion cubic meters of shale gas by 2020. With proper drilling technology, output can increase to 40 to 60 billion cubic meters," Che said, adding that "complex geological structures and high costs" are hindering exploration and production.

He said that costs will decline and profits will rise as technology improves and commercial production yields economies of scale.

Researchers are also developing hydraulic fracturing (fracking) methods that do not use fluid as a means to cope with the nation's tight water supplies.

The cost of one well has already fallen from 100 million yuan to 50 to 70 million yuan, according to Peng.

There are concerns over the potential environmental impact of shale production and the possibility of geological disasters such as minor earthquakes. Che said that although no such incidents had yet taken place, scientists are studying the possibilities to avoid such incidents.

Long Baolin, deputy director of the resources assessment department under the China Geological Survey, said the agency is conducting studies on the environmental influence of shale exploration and will increase research into energy source assessment, especially unconventional resources like shale gas.

Two of the nation's energy giants - Sinopec Corp and PetroChina Co Ltd - have also released exploration plans.

PetroChina plans to invest 11.2 billion yuan to drill 154 wells in shale blocks in Sichuan province in 2014 and 2015, with annual output expected to hit 2.5 bcm in 2015, according to the ministry.

Sinopec plans to pump about 3.5 bcm of shale gas in 2015 with its investment reaching 21.5 billion yuan from 2013 to 2015 and drilling 253 wells, the ministry said.