China is planning an investment blitz to unlock its vast reserves of shale gas, convinced it can match the energy revolution under way in the US and meet a significant part of its fast-growing fuel needs.
The resources ministry said on Thursday that preliminary surveys showed the country had explorable shale-gas reserves of 25.1 trillion cubic metres, in theory enough to meet China’s gas needs for the next two centuries.
This is slightly lower than earlier figures but well ahead of the reduced US estimates of 13.6 trillion cubic metres, down from 23 trillion in earlier studies. The fields are mostly in Sichuan or in sparsely populated regions in the interior.
“China is rich in shale gas resources, which are suitable for scaled development,” said Yu Haifeng, the resource ministry’s deputy director. “But the geological conditions are complex and our exploration technology lags behind advanced countries. If the country’s shale gas output exceeds 100bn cubic meters by 2020, the fuel will become an important source of China’s energy supply.”
A report by the US Energy Information Administration last year said China’s “technically recoverable” reserves were 50pc greater than in the US. Some geologists believe total resources could be much higher, dwarfing the country’s conventional gas reserves.
China has overtaken the US to become the world’s biggest consumer of energy. Its import bill is soaring as China’s middle classes buy cars and industrialisation continues at break-neck pace. The country is overly reliant on coal for power.
Beijing has watched America turn its fortunes around by freeing up vast shale reserves through hydraulic fracturing or “fracking” and is determined to catch up, offering subsidies and an implicit price floor.
China Petroleum Corporation has already found shale gas at 20 sites and has launched a joint venture with Chevron. Royal Dutch Shell has been developing shale projects in China for the past two years, describing the potential as “very powerful”