Prawn frackers

11 September 2012 By Christopher Swann

For the first time, Beijing is cracking open the door for foreign frackers. Smaller, specialist companies have blazed the trail in America, but to profit in the Middle Kingdom will take time and resources they don’t have. Instead, it’ll be the usual suspects like Shell and Exxon.

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China’s Ministry of Land and Resources said on Sept. 10 that foreign oil companies would be able to participate in bids for licenses to drill for shale gas.

The nation’s first tender for exploration permits last year was confined to domestic companies. The latest round will allow foreign energy companies to partner with Chinese companies, which would retain control of joint ventures.

Beijing has set a target of producing 6.5 billion cubic meters of gas by 2015 and 60 billion cubic meters by 2020. That longer-term goal would be equivalent to about a quarter of current production of shale gas in the United States, based on May’s output annualized. Currently China has no commercial shale production.

The U.S. Energy Information Administration estimates that China’s shale gas reserves are the largest in the world. Chinese researchers have pegged the country’s recoverable reserves at 36 trillion cubic meters, against 24 trillion cubic meters in the United States, according to the China Daily.

BP and Royal Dutch Shell have collaborated in joint ventures in China to explore for shale gas but have not been allowed to participate in bidding for drilling licenses. The United States remains the only nation to have significant shale gas production, a process that was pioneered by independent explorers such as Chesapeake Energy and XTO Energy (now owned by Exxon Mobil).

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Context News

China’s Ministry of Land and Resources said on Sept. 10 that foreign oil companies would be able to participate in bids for licenses to drill for shale gas.

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