Petrochina Says New Shale Gas Find Tough To Develop

PetroChina said a new shale gas find in Sichuan province would be difficult to convert to commercial production because Chinese geological conditions were more difficult than in the United States where the industry developed.

"We have made a discovery already. The problem is how to make the production stable, how to increase the production, this needs technology," Zhou Jiping vice-chairman and president, PetroChina told a press conference at the sidelines of the World Petroleum Congress in Doha.

Yet he said he was confident that, in time, commercial shale gas production would commence.

On Tuesday, Reuters revealed Royal Dutch Shell, which is a partner of PetroChina on shale gas exploration in a Sichuan block, had found shale gas there.

On Wednesday, Fu Chengyu, chairman of state-controlled China Petroleum & Chemical Corp (Sinopec), predicted 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, as an 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.

Stronger tectonic movement in China meant existing techniques may not be applicable.

"We need to speed up innovation," he said.

PetroChina has other challenges.

The location of its find is much drier than U.S. shale gas provinces, and large volumes of water are required to fracture or "frack" the shale formations, to release the gas.

Also, Zhou said the Sichuan province was more densely populated than the U.S shale gas heartlands, such as Wyoming, which would also slow development.


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