China's shale gas reserves jump five-fold as output lags

HONG KONG (Bloomberg) -- China boosted its recoverable shale gas reserves more than five-fold last year as the country missed its production target for the fuel.

Recoverable shale gas reserves, or those that can be commercially produced, rose 109 Bcm last year, said Yu Haifeng, director at the department of mineral resources in the Ministry of Land and Resources, according to a transcript of a briefing Wednesday. That increases the country’s total shale gas reserves to 130 Bcm.

“Oil and gas reserves maintained a high level of growth, with shale gas reserves rose significantly,” Yu said. “The ministry spared no efforts in searching for new resources in 2015” as it followed guidance laid out by the State Council, the country’s highest policy making body, he said.

Premier Li Keqiang reiterated last month China’s goal of boosting production and use of natural gas as a substitute for coal. While conventional gas production is rising, China missed its annual shale gas target of 6.5 Bcm last year and earlier cut its 2020 production goal to about a third of its original estimate, citing difficult geology, lack of infrastructure and limited exploration rights. China produced 4.47 Bcm of natural gas from shale in 2015, a more than threefold increase from the year before, the ministry said Wednesday.

Shale Challenge

Exploiting the country’s shale gas resources have proved challenging for international oil companies including Royal Dutch Shell Plc, which last week said it was no longer pursuing it’s China shale venture. BP Plc the same week signed its first shale-gas production deal in the country, joining the nation’s biggest oil company, China National Petroleum Corp., to target the same areas on the Sichuan basin that ConocoPhillips earlier walked away from.

The country is aiming to produce 200 million metric tons of crude oil and 144 Bcm of natural gas this year, the National Energy Administration said on Friday.