Date
29 March 2017
Much of the planned Chinese expansion will come from the Appalachia-like region near Fuling in central China. Photo: WSJ
Much of the planned Chinese expansion will come from the Appalachia-like region near Fuling in central China. Photo: WSJ

China doubles down on shale gas despite global glut

China is ramping up efforts to extract gas from shale despite a global natural gas glut has slowed the US boom in the clean energy.

The Wall Street Journal is reporting that state-owned energy companies are investing billions of dollars in new shale investment.

 Leading the charge is China Petroleum and Chemical Corp. (Sinopec), which is aiming to double domestic gas production within five years.

Sinopec’s push amid a global oversupply of gas, presents an unpleasant surprise for an industry already in turmoil.

If it succeeds, China’s need for imported liquefied natural gas might dwindle — potentially jeopardizing tens of billions of dollars in planned investment from Canada to Papua New Guinea.

China has huge shale reserves but challenges from complicated geology to an inadequate pipeline network long made tapping them elusive.

However, with stifling pollution in many cities, natural gas offers a cleaner alternative to coal.

Developing this industry will also help protect jobs at home.

Much of the planned Chinese expansion will come from the Appalachia-like region near Fuling in central China, where tobacco plots are nestled among rolling hills and where underground rock formations hold some of the biggest reserves of shale gas outside North America.

Sinopec’s investment is transforming a region caught between China’s past and its future. Farmers in sandals plod along winding country roads, woven baskets hitched to their backs.

In Jiaoshi, Sinopec’s local base, workers in red jumpsuits clutch iPhones along the town’s main street, named after a Sinopec oil field.

In taking on this challenge, Sinopec is betting that the country’s future appetite for natural gas will strengthen. Consumption grew 3.3. percent last year, down from recent double-digit gains.

“The space for this market is still rather huge,” said Hu Degao, general manager of Sinopec’s Fuling unit, run partly from makeshift offices resembling shipping containers.

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