China has opened its second shale gas exploration and production tender just as U.S. natural gas storage levels approach capacity. At present, China produces almost no shale gas but government experts have set the production bar very high hoping to produce 6.5 billion cubic meters (bcm) per year beginning sometime in 2015. By 2020, that number is expected to rise to between 60 and 100 bcm/year. U.S. Energy Information Administration (EIA) estimates that China has around 36 trillion cubic meters of recoverable shale reserves which would be the largest of such reserves of any country.
In an unprecedented offering, foreign companies will be able to participate in joint venture bids as minority partners. The Ministry of Land and Resources said, "The intention of the ministry in offering chances to multiple investors with capital and technology is to step up the shale gas exploration process through market competition, in the hope of making use of this new clean energy as soon as possible." At least 70 local companies had made pre-tender applications to bid, and four of the twenty blocks available were granted to Chinese companies.
Shell Chief Executive Peter Voser remarked, "Development of shale is geologically more complex in China, but I think we can achieve similar cost optimization and progress like we have done in North America. We think we can make this a profitable proposition, and that's what we are seeing with the encouraging results so far."
With existing pipelines bringing natural gas into China at a trickle, imports of natural gas increased over the first seven months of this year by 38%. With the help of foreign capital and technology, China stands to benefit greatly from producing its own shale gas. Production estimates may seem optimistic, but if EIA estimates are correct, China could soon be poised to capitalize on the largest shale reserve of any nation in the World.