Exclusive: Shell strikes shale gas in China

Reuters - Royal Dutch Shell Plc has found shale gas in China, a development that could cap imports in a market natural gas producers are hoping will drive demand.

DOHA (Reuters) - Royal Dutch Shell Plc has found shale gas in China, a development that could cap imports in a market natural gas producers are hoping will drive demand.

Emerging Money submits:Chinese energy producers are courting foreign companies for their expertise in extracting natural gas from shale, in what may be larger reserves than what has been found in the U.S.

Royal Dutch Shell Plc will spend $1 billion developing China’s shale gas reserves, according to Peter Voser, the company’s chief executive. Shell has won government approval for its production sharing contract with China National Petroleum Corp., the nation’s biggest oil and gas company, Voser said in an interview in Beijing today. He didn’t specify a timeline or other details for the $1 billion investment.

China, consuming energy at the fastest pace among major economies, has set ambitious targets to exploit its reservoirs of shale gas, the same fuel the U.S. touts as the means to energy independence. It won’t meet them.

China’s plans to unlock what could be the world’s biggest shale gas reserves risk running further off track after 16 firms awarded exploration rights in the latest auction lacked one core skill – not one has drilled a gas well before. Beijing is hoping shale gas can transform the country in the same way as the U.S. boom, though to date there has been little commercial production and a target of producing 6.5 billion cubic metres of gas by 2015 in the world’s biggest energy consumer looks out of reach, according to industry experts.

China’s plans to unlock what could be the world’s biggest shale gas reserves risk running further off track after 16 firms awarded exploration rights in the latest auction lacked one core skill – not one has drilled a gas well before. Beijing is hoping shale gas can transform the country in the same way as the U.S. boom, though to date there has been little commercial production and a target of producing 6.5 billion cubic metres of gas by 2015 in the world’s biggest energy consumer looks out of reach, according to industry experts.

Royal Dutch Shell Plc is expanding plans to make liquefied natural gas a fuel for ships and trucks as Europe’s largest energy producer looks to profit from the cheapness of U.S. gas compared with oil.