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Ohio Utica Shale

Analyst says China pushing to meet ambitious 2020 shale goal

By Bob Downing Published: April 1, 2014

From GlobalData today:

LONDON, UK (GlobalData), 1 April 2014 - Recent production surges and developments by major state-owned exploration companies show promise for China to meet its 2015 shale gas production goal, but its ambitious 2020 target remains distant and a shale gas ecosystem development has proven sluggish. The central government is therefore determined to reform the industry further with a series of policy updates, in its push to achieve shale gas commercialization, says an analyst with research and consulting firm GlobalData.

Based on non-residential city gate pricing and financial incentives expected to be set by the Chinese government, GlobalData evaluated one of China’s most promising shale blocks, known as Sinopec’s Fuling project, and calculated a 7.1% internal rate of return and a break-even price of $7.77 per thousand cubic feet.

However, according to Howe Wang, Upstream Analyst for GlobalData, a combination of political, technical and financial issues are impeding further development of China’s shale gas industry. While recent policy updates include enhanced financial incentives for shale gas production, existing resource and infrastructure monopolies remain intact and have had a particularly detrimental effect.

Wang says: “The majority of China’s premium shale blocks are still closed to foreign gas producers, while national oil companies possess a monopoly over gas pipeline systems. This discourages competition, constrains market participation, and hinders significant advances in exploration and technical knowledge.”

The analyst says that the need to fuel China’s fast-growing energy demand is pressuring the government to accelerate domestic shale gas development. As a result, more foreign collaboration is being facilitated to incentivize various investment bodies to enter the market, and ambitious 2020 production goals of 5.8 billion cubic feet per day (bcfd) to 9.7 bcfd have been set.

However, as Wang continues: “While large-scale production, comparable to American levels, and a dynamic shale gas industry still appear to be distant prospects in China, a robust development plan for the next two years shows encouraging signs of achieving the Ministry of Land and Resources’ goal of 630 million cubic feet per day in 2015.”

-ENDS-

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.