Sinopec releases report on its shale gas development

Development of clean fuel should itself be green and low-carbon

Sinopec Group, Asia's largest oil and gas refiner, has released an environmental, social and governance report on its shale gas development, the first of its kind in China.

Jiao Fangzheng, Sinopec's vice-president, said its shale gas exploration program is being developed based on three principles: operation security, water protection and community communication.

"The shale gas industry is being developed to ensure that the country's energy consumption becomes cleaner and more sustainable. Thus, its development should be green and low-carbon," Jiao said.

According to the report, Sinopec's major project is the Fuling shale gas block in southwestern Sichuan province, which uses water from the Wujiang River for hydraulic fracturing, also known as fracking. Officials insist that it has no effect on residential water use.

Fracturing is a technique by which rock is fractured by pressurized liquid to produce shale gas from shale formations.

"The fracturing fluid developed by Sinopec can also be reused," Jiao said.

The Fuling project, fully owned by Sinopec, started commercialized production in March last year. The company has built 2 billion cubic meters of production capacity at the site, enough to meet the natural gas consumption needs of 8 million residents for a year.

By Dec 22 the company had drilled 75 wells in the block and produced more than 1.14 billion cum of gas.

Officials say the project will reduce carbon emissions by 12 million metric tons annually, which equates to the planting of some 110million trees.

Jiao said the development not only offers environmental benefits but also contributes to the local economy.

"Fuling's shale gas output has been created first and foremost for local residential use, with an expected daily supply of 3.6 million cubic meters of gas," he said.

Lyu Dapeng, a spokesman for Sinopec, said the company has established three joint ventures with local companies, and employed 25 local subcontractors on infrastructure construction and production contracts.

"We have tried our best to reduce the negative impact on local people's lives," he said. "The operational hours are strictly controlled to cut noise, and the timetable for transporting water, for instance, is also scheduled to avoid raising dust."

To improve what the company claims were local mis-understandings about shale gas development, Sinopec has run an awareness campaign as well as created a system for handling any questions or worries people might have.

Long Shaobin, a local official from the nearest township, said: "We used to be the poorest township in the region with total fiscal revenue of 200,000 yuan ($32,000) in 2013. Because of the shale gas project, Sinopec has built a road to the township, which has offered us the chance to sell our produce to a wider market."

He said local people are selling ducks and oranges, for instance, while in the past many of the agricultural products were left to rot as it was difficult to transport them.

In addition to the 30-km road, Sinopec has built water-storage cellars for local people, Lyu said.

"Trust needs to be earned, and all these efforts are important in maintaining what has become a harmonious, mutual development."