* Shell partner PetroChina says two wells produce positive
* China currently has no shale gas production
* PetroChina says rock formations different in China from US
By Tom Bergin
DOHA, Dec 6 Royal Dutch Shell Plc has
found shale gas in China, a development that could cap imports
in a market natural gas producers are hoping will drive demand.
An official with Shell's partner, PetroChina, a
unit of the country's top energy group, state-owned CNPC, said
drilling results from two wells Shell drilled had been positive.
"Shell has two vertical wells and they got very good primary
production," Professor Yuzhang Liu, Vice president of
Petrochina's Research Institute of Petroleum Exploration and
Development (RIPED), said in an interview at the sidelines of
the World Petroleum Congress (WPC) in Doha.
"It's good news for shale gas," Liu, who regularly
represents PetroChina at industry events around the world, told
Reuters late on Monday.
China currently has no commercial production of shale gas,
which is natural gas extracted from soft, finely stratified
It is obtained by hydraulically fracturing the rock and
requires large quantities of water and chemicals to extract,
which environmentalists say can contaminate groundwater
Some industry executives doubt the boom in shale gas in the
United States that has revolutionised the market there could be
replicated elsewhere due to difficult geology, the lack of water
availability or land access issues.
Liu accepted the rock formations in China were "different"
from those in the United States but denied this meant they were
more challenging or less bountiful.
In less than decade, shale gas has transformed the United
States from gas shortage to a point where companies are planning
to export liquefied natural gas (LNG), fundamentally altering
the dynamics of the international gas market.
LNG projects freeze and squeeze natural gas into liquid for
export in tankers. Many producers who were targeting the United
States were forced to rethink their plans, and China, with its
booming energy demand, was seen as the answer to their need for
A Chinese 'shale gale' as the revolution was termed in
America, could jeopardise that market, too.
Shell declined to confirm the find but said in a statement;
"Shell will complete drilling activities by the year end ...
Chief Executive Peter Voser has previously said he had
"great expectations" for Chinese shale but was
cautious in his comments to the WPC on Tuesday.
"We are going through the exploration phase there and are
exactly now analysing what potential is available now in China,"
he told a news conference.
In November 2009, PetroChina and Royal Dutch Shell agreed to
jointly evaluate shale gas reserves of the Fushun-Yongchuan
block in Sichuan basin.
Earlier this year, industry sources said Shell had started
drilling two shale gas exploration wells in Fushun.
A U.S. Energy Information Administration report in April
said China had 1,275 trillion cubic feet (tcf) of technically
recoverable shale gas resources -- by far the largest in the
world, followed by the United States with 862 tcf and Argentina
with 774 tcf.