Chinese Shale Gas Extraction Facing Difficulties: Reports | Business | RIA Novosti

MOSCOW, October 6 (RIA Novosti) – Shale gas extraction in China is facing an increasing number of difficulties, dampening the enthusiasm of state oil and gas giants and foreign investors, South China Morning Post reported Monday.

“The challenges to the growth of shale gas [production] in China include geography and lack of abundant and readily available water close to the reserves,” the South China Morning Post cited Tom Deegan, an adviser to mainland state firms on energy deals, as saying.

Simon Henry, chief financial officer of European oil and gas giant Royal Dutch Shell, also voiced concerns over the extraction of shale gas in Sichuan, a province in southwestern China, and said the company’s investment in its joint exploration project with Chinese state-owned oil and gas corporation PetroChina would be cut.

“In Sichuan, progress has been slower and more difficult than we might have hoped: partly for geological reasons, partly due to challenges operating in the highly populated agricultural region,” Bloomberg quoted Henry as saying Sunday. “It’s likely it will be smaller than originally envisaged.”

China’s mainland is believed to be the world’s largest shale gas resource. According to the US Energy Information Administration, there are 36.8 trillion cubic meters of shale gas in the mainland, which is 50 percent more than US resources.

Sixty-one percent of China’s shale oil and gas resources are concentrated in areas with high water stress or arid conditions, according to a report published September 2 by the World Resources Institute.

Shale gas extraction requires sophisticated drilling technology to inject water and chemicals into the rocks to create cracks to allow the gas escape.

via Chinese Shale Gas Extraction Facing Difficulties: Reports | Business | RIA Novosti.