Nikkei: China Needs More Than Goals to Tap Shale Gas
China's newly finalized five-year plan calls for an enormous increases in natural gas output. The carbon emissions reduction agreement signed by U.S. President Barack Obama and Chinese leader Xi Jinping also requires China to diversify away from coal. Shale gas would be the obvious replacement.
As of now, virtually all that gas remains in the ground. The two companies given the plum rights to develop the gas, state-owned oil giants Sinopec and PetroChina, do not have the technical competence to fully develop the resource. The companies that have the skills, mainly a group of small entrepreneurial U.S. drillers, have so far shown no inclination either to go to China or to help out the two Chinese majors by providing equipment or know-how.
Attracting drilling companies to China will require a significant shift in the way that country's energy resources are owned and allocated. It will mean creating terms in China every bit as favorable as, if not more favorable than, shale gas drillers enjoy in the U.S. and elsewhere.
This is why, for China's senior leaders and economic planners, maps showing the country's extensive shale gas reserves are as much a curse as a blessing. Knowing that vast quantities of much-needed clean energy are in the ground but lacking the domestic infrastructure and technology needed to get it to market efficiently is about as frustrating as any economic problem China now confronts. MORE