State-owned enterprise China National Petroleum Corp (CNPC) has commenced construction work on the PRC’s first dedicated shale gas pipeline in the vast inland province of Sichuan.
The pipeline will be 92.8 kilometres long upon completion and will boast a capacity of 4.5 million cubic metres per day. It will convey gas from production wells in the Changning-Weiyuan shale gas demonstration zone to pipes leading to processing facilities in adjacent Yunnan province.
CNPC, China’s biggest oil and gas supplier, has thus far refrained from providing further details on the wells however, and has not given a schedule for the pipeline’s completion.
A report published by the US Energy Information Administration last week indicates that China has the world’s largest reserves of shale gas, estimated at around 1.1 quadrillion cubic feet, as well as the third largest reserves of shale oil.
State-owned energy companies have already been surveying the resource-rich province of Sichuan for several years now, while the Ordos Basin in north-central China and the Tarim Basin in Xinjiang province are also believed to be host to huge shale gas deposits.
As a result of technological challenges and geological difficulties, however, the extraction of shale gas in China will be more expensive than in other major economies such as the United States.
China lacks an extensive network of pipelines to convey shale gas from its location in largely peripheral parts of inland territory to the major economic centres in the country’s coastal regions. China also suffers from a scarcity of water, necessary to the hydraulic fracking process used to extract shale oil and gas from deep beneath the earth.
A further impediment to China’s rapid development of shale resources is the low level of its extraction technologies, which lag far behind those of North America.
Despite these challenges, the Chinese government is still stepping up the development of its bounty of shale deposits due to the country’s insatiable appetite for energy as its economy continues to rapidly expand.
China’s National Energy Administration has set the ambitious targets of producing 230 billion cubic feet of shale gas per annum by 2015, and at least 2.2 trillion cubic feet per annum by the end of the decade.
By Marc Howe
Image: Via China Economic Net
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