2011-03-21 16:25

Royal Dutch Shell is aming to spend $1 billion a year over the next five years on shale gas in China if its explorations works under way prove a success, Chief Executive Peter Voser told Reuters on Sunday.

Shell is drilling 17 wells in China, including for tight gas and shale gas, in regions such as southwestern Sichuan, China's most prolific gas province.

Inspired by the massive success of unconventional gas -- coalseam methane, tight gas and shale gas -- in the United States, China has over the past year embarked on an exploration campaign for shale gas, part of China's goal to boost use of cleaner-burning fuel and cut dirtier coal.

"Its too early say that shale gas is game changer (in China) but I have great expectations. We are drilling 17 wells this year. That will give us a sense of magnitude of what's available here," Voser said on the sidelines of a forum.

China does not have any shale gas production yet, but has a rough target to pump some 10 percent of its total gas output from shale gas by 2020.

Voser declined to specify how many of the 17 wells are for shale gas, gas that is trapped in rocks and requires special technology called hydraulic fracturing to extract.

"If we are successful, we are aiming to spend $1 billion a year over the next five yeas on shale gas," Voser said, adding that Shell was already spending $400 million on unconventional gas in China this year.

The European major is already producing gas in Changbei, a tight gas field in Ordos Basin in northern Shaanxi province.

Just a year ago, Shell and China National Petroleum Corp (CNPC), parent of PetroChina, signed a 30-year deal to develop another tight gas block "Jinqiu" in Sichuan province.

Industry sources said Shell recently started drilling two shale gas exploration wells in Fushun block, also in Sichuan province.