CSIS: China Awards More Shale Gas Blocks Although Much Remains to be Seen

China has been increasingly focused on the production and use of natural gas as a key way of diversifying its energy sources and addressing growing environmental concerns. While demand continues to outpace supply, China’s annual domestic natural gas production more than tripled to 3.34 trillion cubic feet (tcf) within the first decade of this century. Under the current Five-Year Plan for Natural Gas Development, China hopes to establish a natural gas supply capacity of 9.18 tcf and a consumption level of 8.12 tcf by 2015. As reflected in the Natural Gas Usage Policies, released in October 2012, the country also intends to promote natural gas use in the power and transport sectors, as well as including unconventional gas resources like shale gas and coal-bed methane in the scope of its natural gas strategy.

China, which already imports piped gas and liquefied natural gas, is in the midst of determining the economic potential of its vast shale gas resources, which the U.S. Energy Information Administration (EIA) has estimated to be 1,275 tcf. According to the Shale Gas Development Plan (2011-2015), released in March 2012, China targets shale gas production levels of 229.55 billion cubic feet (bcf) per year by 2015, and 2.12-3.53 tcf per year by 2020, which is equivalent to the entire volume of natural gas that the country produces today. MORE