Sinopec, PetroChina plan 40% growth in shale output to meet goal

Sinopec, PetroChina plan 40% growth in shale output to meet goal

SARAH CHEN

BEIJING, China (Bloomberg) -- China’s largest oil and gas producers plan to increase shale-gas output by 40% a year to meet the nation’s production target.

China Petroleum & Chemical Corp. plans to invest 21.5 billion yuan ($3.5 billion) in shale-gas drilling and expects to produce as much as 3.5 Bcm by 2015, while PetroChina Co. targets output of more than 2.5 Bcm in 2015 after investing 11.2 billion yuan, according to a press conference transcript posted Sept. 17 on the Ministry of Land and Resources website.

China wants to replicate the shale boom that has cut gas-production costs in the U.S. With almost twice as many deposits as in the U.S., China’s 2015 target depends on the nation’s second-largest producer, known as Sinopec, to produce shale gas at the Fuling project in the country’s southwest. Due to geological challenges and lack of economic incentives, the company has halved its target of producing 60 Bcm by the end of the decade, Zhao Xianliang, a researcher with the ministry, said in July.

After drilling 400 shale gas wells as of July, China aims to produce 1.5 Bcm of shale gas this year and about 6.5 Bcm in 2015, according to the transcript. Output for 2017 is estimated at 15 Bcm.