China Unlikely to Replicate US Shale Gas Boom

China is unlikely to replicate the shale gas boom of the United States in speed or scale, but low drilling costs and high local gas prices make it attractive to drill for unconventional gas reserves, Dow Jones Newswire said citing a top executive at one of the few foreign companies drilling for gas in China.

A major energy guzzler, China has ambitious plans to boost natural gas output in coming years and has increased focus on exploration of shale gas and aims to see multi fold jump in production.

However, lack of technology and geological information are some of the major hurdle in the way of full exploitation of this unconventional resource, Paul Atherley, managing director of AIM-listed Leyshon Resources, told Dow Jones Newswires . “If they want to reach those targets, they need to get out there and drill. And that's just not happening at the moment.”

However, he added that economics of drilling in China was very attractive. Drilling an exploration well costs only around $1.5 million, about a third compared with Eagle Ford, Texas, he added.

Australia-based Leyshon has been active in Ordos Basin in Shanxi province and recently commenced drilling at the 708 square kilometre Zijinshan block located on the eastern flank of the basin. The three well programme will test for unconventional gas over a 600 metre interval to a depth of approximately 2.4 kilometres. The first two wells are expected to be completed by the end of November with completion of the third expected early in the new year.