China will see its production of shale gas exceed levels in the US with the country becoming a major producer within a decade, Fu Chengyu, the chairman of China's state-run Sinopec, said Wednesday.
"I think total reserves are even more than the US, so production is not less than the US, but it's a matter of timing," Chengyu said on the sidelines of the World Petroleum Congress in Doha.
"Like in the US, I think maybe in five or 10 years you will see a lot more shale gas produced in China," he said.
To begin commercial scale production, China has set itself a target of growing the annual production capacity of shale gas to 15 billion-30 billion cubic meters by 2020 by emulating the transformational boom in US shale over the last 10 years.
This year, the US' Energy Information Administration estimated that China may hold almost 1,300 Tcf of technically recoverable shale gas, the world's biggest resource and almost 50% larger than the 862 Tcf estimated for the US.
Citing a PetroChina official, Reuters reported Tuesday that Shell has had positive results from two shale gas wells drilled in partnership with PetroChina.
The two companies agreed in late 2009 to jointly evaluate and develop shale gas in the Fushun-Yongchuan block in Chengdu in China's Sichuan province. The partners began drilling in the Fushun block in recent months.
Speaking in Doha, Shell's upstream chief Malcolm Brinded declined to comment on the report, however, confirming only that "we are drilling."
According to Chinese government forecasts, by 2020 the country's demand for gas will be around 300 billion cu m/year.
By 2015, Chinese gas production is expected to climb to some 150 billion cu m/year and unconventional gas sources, including tight gas, coal bed methane and shale gas, are expected to make up 43 billion cu m or 29% of the total, PetroChina's vice president for upstream research Ning Ning told the Doha conference.
PetroChina, which produces 75% of China's gas, forecasts domestic gas production this year at some 100 billion cu m, and expects this to grow by 12% year, Ning said.
By 2030, China's total gas production is seen reaching 250-300 billion cu m with unconventional gas at between 100-150 billion cu m, up to half of the total, Ning said.
Ning said China's emerging shale gas industry faces a number of challenges, however, including the need to employ new technology to reduce the cost of drilling.
China's shale gas targets also face challenges from the lack of water for well fracking in many regions and the need to limit the footprint of developments, especially key shale areas which lie in populated zones.
Last year, Barclays Capital estimated that some 7.3 million mt/year of LNG demand in China is likely to be displaced by shale supplies due to the impact of domestic shale gas production over the next 10 years.
