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Technology limiting factor for shale gas auction in China

05th July 2012

Chinese Ministry of Land and Resources to hold second auction of shale gas in July

Shale gas reserves will be auctioned
Shale gas reserves will be auctioned

Wang Dawei, official at the Ministry of Land and Resources, has recently revealed that a second auction of Chinese shale gas reserves will be held in July. Already more than 70 companies, about a third private, have expressed an interest in the auction. Ministry data indicates 25.08 trillion cubic metres of shale gas in China, excluding Tibet and Qinghai regions.

China currently has 62 shale gas wells in development zones, 24 of which generate output for industrial use. Liu Yijun, a professor with the China University of Petroleum, has told Xinhua that China's shale gas development is still in a primary stage, and has a long way to go towards mass commercial use.

Christof Ruehl, chief economist at BP, told Xinhua that technological innovation will be the key to making shale gas development safe and efficient. Some state owned Chinese petrochemical companies, such as PetroChina and Sinopec, have already made efforts to connect with overseas owners and developers. Sinopec in particular has recognised the technological barrier as a difficulty in shale gas development, as China is still heavily reliant on foreign technology.

Zhou Jiping, president of PetroChina, told Xinhua that the future of China's shale gas industry will depend on the accuracy of the reserves' data and independently developed technology.

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