China’s imminent shale rush comes at a critical point. It will soon overtake the United States as the world’s top energy user and is already the world’s biggest coal burner. Beijing’s bureaucrats thus face a daunting challenge: how to clean up its brown skies while meeting the world’s fastest growing energy demand.
China has spent tens of billions of dollars buying into energy resources from Africa to Latin America to slake the unquenched thirst for fuel from its growing industry and burgeoning cities. But China may have more energy riches under its own soil than policy makers in the world’s second-largest economy ever dared imagine.
Just over a year ago, Beijing awakened to a technology revolution that has unlocked massive reserves of gas trapped within shale rock formations in the United States.
Once deemed too costly to extract, shale gas has turned around U.S. dependence on foreign gas imports. Just a few years ago, the United States was building scores of expensive facilities to import liquefied natural gas (LNG), looking at booming long-term demand forecasts and wondering which countries would supply the huge volume of imports it needed.
Instead, the United States is turning import facilities into export terminals, because its shale gas reserves are estimated to be big enough to meet domestic demand for 30 years. This is an American dream that China wants to emulate.
“America’s shale gas production alone has exceeded that of total Chinese gas output. That gives us a lot of confidence,” said Zhang Dawei, deputy director of the Strategic Research Centre for Oil and Gas in the Ministry of Land and Resources(MLR).
China’s confidence has been bolstered by a new report of its estimated reserves of shale gas, which shows them to be, by far, the largest in the world.
The U.S. Energy Information Agency in a report last month estimates China holds 36.1 trillion cubic metres (1,275 trillion cubic feet) of technically recoverable shale gas reserves — significantly higher than the 24.4 tcm (862 trillion cubic feet) in the United States, which has the second-most. Industry estimates in China peg shale gas resources slightly lower — but still huge — at 26 trillion cubic metres (tcm), although they have yet to give their own forecasts of how much of that is recoverable.
China’s imminent shale rush comes at a critical point. It will soon overtake the United States as the world’s top energy user and is already the world’s biggest coal burner. China also pumps more carbon dioxide into the atmosphere than any other country.
Beijing’s bureaucrats thus face a daunting challenge: how to clean up its brown skies while meeting the world’s fastest growing energy demand.
Natural gas burns more cleanly than other fossil fuels and installing gas-fired power generation is cheaper and easier than building nuclear plants. The problem is China cannot meet its rising demand for gas with its limited reserves of conventional gas. It faces the prospect of becoming as dependent on international markets for gas as it is for oil, where China is the world’s second-largest importer.
But shale gas may not be as clean as advertised, according to a study released last week by Cornell University in New York. This study argues that significant amounts of methane — a potent greenhouse gas — escape into the atmosphere during production in wells and distribution in pipelines.
Regardless, China is racing to find out how much shale gas it can exploit — and how quickly it can get the technology and build the infrastructure it needs to pump it to market — to reduce its dependence on foreign sources of gas.