Everyone is jealous of America’s shale boom, but China may be best situated to imitate it.China has the world’s largest reserves of shale gas, estimated to be more than twice those of the United States. The country’s smoggy skies, in part a result of heavy reliance on coal (China accounts for nearly half of the world’s coal use) are wreaking havoc on public health and economy alike. Natural gas could displace much of this coal and help combat urban smog in the process. Both the supply and demand are there.Now, as the FT reports, one Chinese oil major is ahead of schedule in its bid to catch up to its American counterparts:
Chinese oil company Sinopec will put its first shale gasfield into commercial operation sooner than expected, aiming for annual production of 10bn cubic meters by 2017 as the country seeks to reduce its reliance on imported oil and gas. […]
Sinopec engineers were excited by initial results at wells drilled this year at Fuling, near the southwestern metropolis of Chongqing. The company plans annual capacity at Fuling to reach 1.8 bcm by the end of this year, rising to 5 bcm by 2015, well above its earlier target of 2 bcm by next year from all its shale plays. Media reports say it could spend $4bn on Fuling, a number the company did not confirm.
Up to this point, China’s shale ambitions have been hamstrung by a number of complicating factors. Fracking is a water-intensive process, a big sticking point considering China’s struggles with water scarcity. The country’s geology is more faulted than that of the United States, making it harder both to site and to drill horizontal wells. Moreover, China lacks the infrastructure and robust oil and gas services industry that helped expedite American shale production.But where there’s a will, there’s a way, and Beijing most certainly has the will to tap shale. Clearing urban skies would be both a political and economic win for China’s leadership. It would also give China what every country on the planet covets: a steady domestic supply of energy. And for greens, to the extent that shale gas displaces coal, China’s success or failure with fracking will have a large impact on climate change.