Financial Times: Country focus: China faces difficulties in shale gas production

Standing in the Great Hall of the People in Beijing this month, Wen Jiabao, China’s premier, faced thousands of delegates at the ruling Communist party’s annual congress and three small syllables passed his lips: yeyanqi, or shale gas.

It was the first time shale gas had been mentioned in the premier’s annual work report, a three-hour policy speech that is mostly the same from one year to the next. The mention underscores how China’s leaders put a growing priority on unconventional gas as they seek to secure resources for the world’s biggest energy user.

China has some of the largest shale gas potential in the world, but is still at a nascent phase of exploration, with the extent of commercially viable reserves un­known. Beijing has encouraged the development of shale gas and other unconventionals because domestic gas resources could allow the country to import less gas and reduce carbon emissions as gas replaces coal.

If fully developed, China’s shale resources could radically alter the dynamics of supply for the world’s biggest energy consumer, just as shale gas has changed the situation in the US, the world’s largest producer of shale gas.  MORE