Shell Extracts Cheap Gas in China

Royal Dutch Shell said it is achieving low direct unit operating costs at the Changbei natural gas field that it’s developing with PetroChina, news agency Bloomberg reported last week.

Shell’s general manager of the field, Xu Li, said company’s direct unit operating costs, which it defines as excluding capital investment and other indirect operational costs, is about $1 per barrel of oil equivalent, or lower than similar projects, Bloomberg added.

According to the news agency, Shell is spending $1 billion in China this year and is also boosting its investment in country’s unconventional natural gas sector.

“We have started to drill more test wells in the second phase of development in the Changbei project, and we expect the second phase to bring a significant amount of output,” Xu was quoted by Bloomberg as saying.

Xu disclosed that test production from the second phase could start in late 2014 or early 2015 based on test results and government approvals.

Shell is the operator of the project. 

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