NEA Urges State-owned Firms to Meet Shale Gas Target

The head of the National Energy Administration (NEA) has asked state-owned oil and mining companies to increase their investment in shale gas and use domestic technologies to develop the sector.

At a June 25 meeting on the development of the shale gas industry, Liu Tienan, director general of the NEA, urged the firms to implement the 12th-Five Year Plan to produce 6.5 billion cubic meters shale gas annually by 2015. Participants include heavyweight state-owned companies such as China National Petroleum Corp., China Petrochemical Corp., China National Offshore Oil Corp. and China National Coal Group Corp.

Liu also said companies should research technologies related to assessment, exploration, extraction, and environmental assessment and protection. He encouraged them to develop and deploy home-grown technologies in these key areas.  

Shale gas was already commercially viable in the United States on a large scale, which was playing an important role in global energy patterns, Liu added.

China had good shale gas prospects, he said, so local government and oil firms needed to work together to build the industry and ensure the country's energy supply. To do this, Liu said investment entities should be diversified to encourage development of the sector.

On June 18, the Ministry of Land and Resources (MLR) and the All-China Federation of Industry and Commerce issued guidelines intended to encourage private investment in the resources sector, which has long been dominated by state-owned companies.

The guidelines cover a range of investment areas, including mining exploration and development of unconventional oil and gas resources such as coal-bed gas and shale oil and gas. They also safeguard the rights of private investment entities competing in the market.

Earlier this year the MLR, National Development and Reform Commission and the Ministry of Finance set the 6.5 billion cubic meters target. The target is a fraction of the 25.1 trillion cubic meters of recoverable shale gas the MLR says a preliminary evaluation showed the country had. This figure did not include reserves in Qinghai and Tibet.

Zhang Dawei, deputy director of the MLR's Oil and Gas Resources Strategy Research Center, said this estimate was based on geological studies in about 20 key development areas. MLR estimates tend to be cautious, Zhang said.

A source in the MLR's geology division said only about 60 wells were drilled for the survey, meaning the nationwide estimate should be considered very preliminary.

China is estimated to have the largest shale gas reserve in the world, but only 20 percent of them are assumed to be accessible, a 2012 report by the International Energy Agency said.

Public acceptance of extraction was likely to have less influence in China than in other countries, the report said, but in the next 25 years public sensitivity to environmental issues could rise significantly.