Royal Dutch Shell Plc (RDSA), which signed the first shale-gas production sharing contract in China, will trim its project in Sichuan province because of geological challenges and the area’s dense population.
The Anglo-Dutch company along with China National Petroleum Corp. had planned billions of dollars in investment from this year to meet the country’s energy demand, the world’s largest.
Shell now plans to focus chiefly on the development of the Changbei tight gas field in the Shaanxi region.
“In Sichuan progress has been slower and more difficult than we might have hoped: partly geological reasons, partly some of the challenges of operating in the very highly populated agricultural region,” Bloomberg quoted Shell chief financial officer Simon Henry as saying. “It’s likely it will be smaller than originally envisaged.”
The country may miss its 2020 target for shale-gas production as a lack of infrastructure and technology hampers development of the world’s biggest reserves, a government official said previousely.
The nation had set a national output target of as much as 100 billion cubic meters by the end of the decade.
China is sitting on 1,115 trillion cubic feet of technically recoverable shale gas resources, according to the US Energy Information Administration, but much of it is located in arid areas of the country.
Since drilling and developing shale gas requires massive amounts of fresh water, this also presents an acute problem for a country that may see its natural gas consumption more than triple over the next 25 years
