As a country that values oil above gas, China's shale gas sector has been underdeveloped for a long time. But over the past few years, the government has come to realize the importance of this "unconventional natural gas."
According to a report released by the Energy Information Administration (EIA) on April 8, China has the largest reserves of shale gas in the world, which is estimated to be 36 trillion cubic meters. In this fledging stage of shale gas exploration, many factors need to be taken into consideration for preparation of fast-tracked plans.
Unfamiliar 'black stone'
Shale gas may still be an unfamiliar item to many people. Yet, as early as five years ago, Zhang Jinchuan, director of the Energy Experiment Department of China University of Geology was carrying this 'black stone' with him whenever he attended a meeting elsewhere, explaining to the participants what shale gas is.
As the first Chinese academician to conduct studies in this field, Zhang started his research on shale gas in 1999.
According to Zhang, shale gas is natural gas from shale formations, and it belongs to the same category as coal bed gas and tight gas. Shale is a type of sedimentary rock, and it acts as both the source and the reservoir for natural gas. It is usually considered a natural shield for the movement of oil and gas.
In the past ten years, the production capacity of shale gas increased 10 times in the US, meeting one fourth of its natural gas demand. In 2009, the amount of shale gas produced in the US surpassed China's annual output of all kinds of natural gas.
The exploration of shale gas largely relieves the domestic energy stress in the US, and in 2008, the degree of dependency on oil imports dropped for the first time since 1977.
China has long valued oil above gas, which in fact limits the development of the natural gas industry. Today natural gas only occupies 3% to 4% of China's primary energy consumption structure, while the figure averages 23% to 24% in other major countries such as the US.
Bottleneck: technique or system?
A longstanding viewpoint in the shale gas industry has been that "the bottleneck holding up of the exploitation of shale gas has been the extraction technique." However, Zhang's viewpoint differs from this one. He said the three aspects of prospecting, exploitation, and sales are all problematic. "With absolute confidence," he said, "I am optimistic about the shale gas industry. There is no bottleneck and exploitation is only a matter of time."
Zhang pointed out, "the US started doing research on shale gas in the 1970s, and geological surveys during the prophase took a very long time. Real large-scale exploitation only started about five or ten years ago. Horizontal wells and fracturing techniques that are applied in exploring shale gas have already matured in China. We should not consider it difficult before we start."
He also warned that it is inappropriate to emulate the US's adoption of costly and controversial techniques because their experience will not be suitable for China.
"Technique is not the bottleneck, but the current system and policy-making may be barriers in the development of the shale gas industry, similar to what was seen in the course of exploring coal bed gas," said Professor Chen Weidong.
Chen considers insufficient infrastructure to be one reason, but the major problem is the lack of market principles, which smothers the vitality of the industry.
Argument on environmental risks
In Gas Land, a 2011 Oscar Nominee for Best Documentary film, a US resident lit his faucet water on fire in the kitchen. The scene ignited intense debate in the US, and the director of this documentary explained that the exploration of shale gas had polluted underground water.
Every coin has two sides, and so it is with shale gas. The risk of exploring shale gas stems from the fracturing technique, which causes shale gas to escape and be forced back to the surface of the horizontal well.
What's more, the carbon emissions of shale gas have also been questioned by the public. A study released by Cornell University in April shows, compared to coal, shale gas will have a more serious effect on climate change.
But the evidence, so far, is not sufficient and more research is needed. As China has just started the exploration of shale gas, environmental evaluation and supervision should be in place before it develops rapidly.
