* Eyes technology breakthrough between now and 2015
* Targets 6.5 bcm output in 2015, 60-100 bcm in 2020
* Aims to find 200 bcm proven recoverable reserves by 2015
* Second shale gas tender in April/May
(Adds details, writes through)
By Jim Bai and Chen Aizhu
BEIJING, March 16 China wants to identify
the right technology to unlock its potentially large shale gas
resource in the next few years, aiming for a leap in shale
production by 2020, two years after it embarked on a search of
the unconventional fuel.
Top energy agency, the National Energy Administration (NEA)
officially unveiled on Friday a target to produce 6.5 billion
cubic metres (bcm) of shale gas by 2015, or roughly 6 percent of
China's current total gas production.
But it intends to dramatically boost output to 60-100 bcm in
2020, a level some experts say is over-ambitious as it faces
techonological, environmental and regulatory roadblocks.
"The U.S. technologies may not be fully applicable in
China's shale gas formation, they need to be revamped," Zhang
Yuqing, NEA's head of Oil and Gas Department, said.
"The main task in the 12th five-year period is to lay a good
foundation, especially some key technologies in shale gas
exploration and development."
China started the shale push in late 2009, inspired by a
shale boom in the United States. Its state energy firms have
since then entered multi-billion-dollar shale deals in the
United States with Chesapeake Energy and Devon Energy
At home companies have drilled several dozens of wells and
brought in firms such as Royal Dutch Shell, Chevron
Corp and Hess Corp for joint studies.
But China has yet to start commercial shale production,
though it is widely believed to hold the world's largest shale
The Ministry of Land and Resources revealed early this month
China may hold 25.08 trillion cubic metres (tcm) of potentially
recoverable shale gas resources. That compared to a U.S. Energy
Informationa Agency's forecast in March 2011 at some 36 tcm.
NEA's Zhang said foreign firms can enter product sharing
contracts with Chinese firms or provide engineering services.
Shell, which has done more exploration works in China than
the rest of foreign firms - having drilled an estimated five
wells in the southwest Sichuan basin, has yet to land a PSC
contract with partner PetroChina, an industry
executive has told Reuters.
China aims to complete an evaluation of national shale gas
resource potential, make shale gas technology improvements, and
localise the manufacture of major equipment by 2015. It will
also establish industry standards and perfect government
policies, according to the NEA plan.
Exploration will focus on finding 600 bcm of
proven geological shale gas reserves and 200 bcm of recoverable
deposits by 2015.
China 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 ever auction in July last year, another government
"Blocks on offer will be increased and the number of
qualified bidders will increase too," Xiong Bingqi, an official
with the Ministry of Land and Resources, told reporters.
He said the government would require rights holders for
traditional oil and gas blocks to scour shale gas as well, and
could take back the development rights if shale gas exploration
inputs were below certain standards.
Xiong did not specify the input standards, but some analysts
doubt the rule would be strictly applied on China's powerful oil
triumvirates - China National Petroleum Corp, China
Petrochemical Corp and China National Offshore Oil Corp - which
have claimed some 40 percent of Chinese territories.
(Editing by Richard Pullin and Jacqueline Wong)