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Shale Oil Boom in China? Not So Fast…

China’s shale oil reserves are the third largest in the world, but to this point they’ve remained largely undeveloped and unexplored. Beijing is hoping to turn that around, and earlier this week US energy company Hess Corp signed a shared production contract with PetroChina to begin work on China’s shale oil reserves. Reuters reports:

Hu Wenrui, former vice president of PetroChina, said Chinese companies have so far drilled about 20 shale oil exploratory shale oil wells, mostly in northern China’s Ordos basin.

But this isn’t as simple as sticking a pipe in the ground and bottling the black gold that comes sprouting up. China is already struggling to extract shale gas, though its reserves are far and away the world’s largest. China’s geology is more crunched, more faulted, making it a lot more difficult for the country to replicate American success. And water, a key component to the fracking process, is already scarce there—many of the shale oil and gas reserves are in areas with little water to speak of.

China’s shale industry has also been hamstrung by a lack of technical experience, but the country could start to overcome that hurdle as US companies like Hess start becoming more involved. Whatever comes of these new exploratory shale oil wells, one thing is certain: the US is still holding the reins on the shale energy bandwagon.

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  • ljgude

    Yet another proof of Peak Oil. 😉

  • Would not surprise me if China has asked Israel about their efficient methods of processing shale oil.

  • David Dunn

    Most of China’s coal also comes from the arid most part of the country. Coal extraction also requires a lot of water. The one place where fracking might seem to make sense is Sichuan which has more water, but Sichuan may make just as much of a mess of fracking as they did with coal-bed methane gas. Both are technologically tricky and it is a good idea to make sure you have foreign expertise involved in the long term. China though treats foreign expertise as a quick fix and this doesn’t work. Now if Hess or BP was in China under fair terms and had complete management control, than perhaps success would be possible, but this won’t happen.

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