2010-06-25 15:08

China Petroleum & Chemical Corp (Sinopec) started evaluating shale gas exploration in southern Sichuan province, and its annual productivity may hit 2.5 billion cubic meters in five years, Friday's China Business News cited sources as saying.

Sinopec Exploration Southern Company (SESC) set up its shale gas exploration department, with more than 20 people now, on June 18, for shale gas projects in northeastern and southern regions in Sichuan projects, and "the project will produce shale gas of hundreds of thousands cubic meters in two years," sources at SESC told the newspaper.

The shale gas may complement natural gas, and pull down the price of imported gas, Wang Zhen, director of business administration faculty at China University of Petroleum, told the newspaper.

China's natural gas supply is sometimes in shortage mostly in East and Central China, where natural gas demands surged quickly.

"The US uses a lot of shale gas, instead of relying on imported natural gas, so Qatar sold natural gas very cheaply to Europe," Hongyuan Securities' analyst Chai Qinhu was quoted in the report.

"But the exploration of shale gas is more expensive and tougher than that of natural gas, as shale gas is reserved in more complicated geological environments," Wang said.

Shale gas is an unconventional gas resource reserved in mud shale. The world's reserves are about 456 trillion cubic meters in total, and China's exploitable reserves are estimated at 26 trillion cubic meters.

China's shale gas would take five percent to ten percent of the country's total 300 billion cubic meters of gas consumption by 2020, the newspaper cited Zhou Jiping, president of China National Petroleum Corporation, as saying.