UK Markets open in 52 mins

Chinese Oil Giant Significantly Boosts Shale Reserves

Irina Slav

State energy giant PetroChina has announced new additions of almost 741 billion cubic meters to its shale gas reserves in the Sichuan province as well as certified reserves of 358 million tons at the Qingcheng oil field.

The company said in a stock exchange filing cited by Reuters that it had made a breakthrough in shale oil and gas exploration, which had led to the upgrade in reserves. The total proven reserves in the two shale gas blocks in Sichuan are in excess of 1 trillion cubic meters of gas, PetroChina also said.

Shale gas—and oil too—has been touted as a potential solution to China’s energy problem, which comes down to demand outstripping supply. However, emulating the U.S. shale boom has proven tricky.

China has recoverable shale gas reserves of 1,115 trillion cu ft, the latest estimate of the Energy Information Administration from 2015 shows. This makes the country the biggest reservoir of shale gas, with Argentina a distant second with a little over 800 trillion cu ft. Yet, it is very unlikely that China will be able to repeat the U.S. shale gas boom.

However, China’s shale gas deposits are in remote, geologically challenging areas. “Geologically challenging” means that they are in mountainous regions and the gas-bearing rocks are much deeper than they are in the U.S. shale patch. Also, the remoteness of these deposits means there is no established infrastructure for production and transportation of all these trillions of cubic feet of gas.

Even so, investment in unconventional oil and gas exploration has been on the rise in the last few years and it has borne fruit. Earlier this year, PetroChina said it had achieved a promising daily production rate from a shale oil find in western China. A couple of months later, CNPC announced it had made a substantial shale oil discovery in the northern part of the country.

If enough of these proven reserves announced in the new PetroChina filing are recoverable with existing technology, they could certainly help the country reduce its dependence on imported oil and gas.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Read this article on OilPrice.com