Shale oil drilling rig

Shale gas find in China difficult to develop - PetroChina

A shale gas discovery in China's Sichuan province will be difficult to convert to commercial production, PetroChina has said.

This is due to Chinese geological conditions being more difficult than in the United States where the shale gas industry developed, PetroChina's vice-chairman and president Zhou Jiping said at the World Petroleum Congress in Doha, Qatar.

"We have made a discovery already," Zhou said. "The problem is how to make the production stable, how to increase the production, this needs technology."

However he added that he was 'confident' that, in time, commercial shale gas production would commence.

Royal Dutch Shell, a partner of PetroChina on shale gas exploration in a Sichuan block, was reported to have found shale gas there earlier this week.

Chairman of state-controlled China Petroleum & Chemical (Sinopec) Fu Chengyu predicted that China's shale gas production would surpass that of the United States within a decade.

U.S. energy markets were transformed by the development of shale gas, from a position of natural gas shortages to a point where companies are planning to export gas to Asia and looking at new uses for gas, such as auto fuel.

The optimism around Chinese shale has been stoked by a U.S. Energy Information Administration report in April which said China had 1,275 trillion cubic feet (tcf) of technically recoverable shale gas resources - by far the largest in the world, followed by the United States with 862 tcf.

However, in industry jargon, "resources" only infers a potential or theoretical asset, and PetroChina's Zhou cautioned against reading too much into such statistics.

"Resources are not equal to reserves," he said, using the industry term for established amounts of oil and gas.

He added that stronger tectonic movement in China meant existing techniques may not be applicable, and that there was a need to "speed up innovation".

PetroChina has other challenges, with the location of its find being much drier than U.S. shale gas provinces, requiring large volumes of water to fracture or "frack" the shale formations and release the gas.

Zhou said that development would also be slowed by Sichuan province's dense population in comparison to U.S shale gas heartlands such as Wyoming.

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