The Shale Gas Potential of China

Abstract

Abstract China is energy hungry and shale gas, a recent engineering feat in the United States, is likely to prove an invaluable asset for China as well. Currently about 70% of China’s total energy is still from coal and only 4% derives from natural gas. Natural gas per capita in China is about 2.2 thousand cubic feet per year while, in the United States, it is about 77.4. To reach a semblance of a developed country’s energy profile, China has to increase its natural gas usage and this is an expressed policy of the government. With growing international demand in natural gas, shale gas has become the brightest spot. It is an unconventional energy source, extracted from reservoirs with very low porosity (2% or less) and permeability (0.1 to 0.0001 md or even less). There are abundant reserves around the world, about 16,000 trillion cubic feet (Tcf). In China, shale gas resources are widely distributed in the Sichuan, Tarim, and Ordos basins and other continental sedimentary basins with shale gas formation conditions. The estimated potential shale gas resources in China amount to about 1,084 to 3,530 Tcf. Despite this potential, China's shale gas exploration and development is still at its infancy. This paper investigates the status of shale gas development in China and describes shale gas accumulations, their geographical distribution and the economic value of shale gas production to the country. If, emulating the United States experience, where in the course of less than ten years shale gas contribution to total gas production increased from essentially zero to 17% (estimated), Chinese shale gas could deliver 1.8 Tcf of gas (from a total projected gas consumption of 10.6 Tcf) with an annual value of preventable imports of about $18 billion by 2020.