China’s Shale Gas Bust
China is finding it harder than it expected to unlock a shale gas boom like the one in North America, calling into question its lofty goals to use natural gas to help clean up its air and control the growth of greenhouse gas emissions. Citing complicated geology and high production costs, the Chinese government has cut its ambitious 2020 target for shale gas development roughly in half.
In 2013 China became the third biggest user of natural gas behind the United States and Russia, consuming 166 billion cubic meters (bcm). By 2019, the International Energy Agency expects China’s annual natural gas consumption to grow 90 percent, to 315 bcm. Half of that increase is expected to be supplied by domestic gas production, which would come from multiple sources, including shale reserves.
That IEA estimate for gas consumption is much lower than the production target China had set for itself: 420 bcm of natural gas annually by 2020, with hydrofracturing, or fracking, being used to get 60 to 80 bcm from shale.
China is estimated to hold the largest technically recoverable reserves of shale gas in the world—nearly twice as much as the U.S. But the shale industry in China has struggled to get off the ground. Most projects are still in the exploration phase. In many cases the formations that hold gas are deeper than in North America and more expensive to reach. Further, Chinese shale tends to have more clay in it, which is an obstacle to extraction (see “China Has Plenty of Shale Gas, But It Will Be Hard to Mine”). These challenges led the government last week to reduce the 2020 shale-gas target to 30 bcm.
Even that would represent a huge increase. Of the 117 bcm of natural gas that China produced in 2013, only 0.2 bcm came from shale.
If China is going to meet its goals for using natural gas, it probably will have to rely more on imports. It plans to rapidly build up the infrastructure for transporting and storing imported natural gas.
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