22 April 2014, News Wires – Chinese state oil and gas giant PetroChina plans to spend more than 10 billion yuan ($1.6 billion) on shale gas this year, according to a report.
PetroChina’s decision to triple its shale gas spending from expenditures on the unconventional fuel over the past few years comes just months after Sinopec lifted hopes that China is near a breakthrough by announcing a commercial find, Reuters reported.
PetroChina has also lifted its 2015 shale gas output target to 2.6 billion cubic metres, up from the previous 1.5 Bcm, according to a company official and a government source cited by the news wire.
That would represent only about 2.3% of China’s total natural gas output of around 113 Bcm last year.
“PetroChina wants to play catch-up after Sinopec’s success,” one government source told Reuters.
Since around 2010, PetroChina has spent about 3 billion yuan ($482.39 million) total on pilot shale drilling, according to the news wire. The state giant, which makes up around 70% of China’s total natural gas output, has so far largely focused on growing its conventional oil and gas portfolio.
PetroChina will reportedly focus on two pilot zones: Weiyuan-Changning in south-west Sichuan basin and Zhaotong in Yunnan province.
“PetroChina has over the past four years improved understanding of the shale resources and achieved some technological breakthroughs,” said Mao Zefeng, joint company secretary of PetroChina.
“We’re stepping up shale gas development this year,” he said.
Sinopec’s shale work has been concentrated in the Fuling area of Chongqing municipality in south-west China, also part of the Sichuan basin, one of the most promising geological zones for the unconventional fuel. Sinopec has drilled nearly 30 pilot shale gas wells in the Fuling area.
The main challenge for both Sinopec and PetroChina is to cut the drilling cost per well to under 50 million yuan ($8 million), half the current hefty rates averaging around 80 million – 100 million yuan, experts say.
The government has set shale gas production targets at 6.5 Bcm for 2015 and at 60-100 Bcm for 2020.