Shell is set to share China’s shale work

ROYAL Dutch Shell has signed the first ever shale gas production sharing deal with China, it announced yesterday, as the country tries to tap into its potentially lucrative energy assets.

Shell has already done some exploration works on the 3,500 square kilometer Fushun-Yongchuan block, and will now work with state-owned China National Petroleum Corporation on the site.

Inspired by a shale boom in the US, China started its shale push in late 2009. Its at-home companies have drilled several dozen wells and brought in firms, such as Shell and Chevron, for joint studies.

“China has huge shale gas potential and we are committed to making a contribution in bringing that potential into reality,” Peter Voser, chief executive officer of Shell, said in a statement.

Shell already operates in tight-gas fields in Sichuan in partnership with PetroChina, as it is also assessing opportunities for coalbed methane. The company also has a fast-growing downstream retail business in the country.

China’s largest energy agency, the National Energy Administration (NEA) has set a target to produce 6.5bn cubic metres (bcm) of shale gas by 2015, with hopes of producing 60-100bcm by 2020, a figure that may be too ambitious said some analysts.

China is believed to hold the world’s largest shale resource, but has yet to start commercial production.

The country is likely to tender its second batch of shale gas blocks in April or May after awarding two out of four blocks in its first auction in July last year, Xiong Bingqi, an official with the Ministry of Land and Resources, has told reporters.