China's SPT Energy is Positive About Shale Gas Sector

Beijing based SPT Energy, a provider of oil and gas drilling services, expects the percentage contribution from shale gas projects to its revenues to triple in three years.

According to a report in South China Morning Post, the company expects revenues pertaining to shale gas drilling to make up 10 per cent of total revenues by 2016. Currently that share is about 3 to 5 per cent.

"Industry people had anticipated large-scale production would come at least three to five years after wells drilling first started [two years ago]," Wang Guoqiang, chairman of the company said. "Given the good drilling results [obtained recently by industry leaders PetroChina and Sinopec], we may get there earlier than expected."

A senior official at China Petroleum & Chemical (Sinopec), who declined to be named, said that despite the larger-than-expected amount of gas produced at some exploration wells, more wells needed to be drilled before the feasibility of large-scale production could be ascertained, said South China Morning Post.

Despite concerns that drilling has been too slow, Wang said he was optimistic the mainland would be able to meet the shale gas output target of 6.5 billion cubic metres in 2015. It produced 107 billion cubic metres of natural gas last year.

"The key is whether factory-style large-scale drilling can happen quickly, so that production cost can be lowered enough to justify commercial production," the newspaper quotes Wang as saying.

Beijing has launched two rounds of bidding for shale gas exploration rights, in mid-2011 and then a year ago. The third round is expected by the end of the year.

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