Chinese Sinopec Raises Stakes With Massive New Shale Basin

• A new shale gas field in the Sichuan basin contains as much as 146 billion cubic meters of proven gas reserves.
• The gas reserves at Qijang shale field in Sichuan are found at a depth of 3,500m.
• The much deeper location of the shale gas reserves in China makes extraction much more challenging than in the U.S. 

A new shale gas field in the Sichuan basin contains as much as 146 billion cubic meters (bcm) of certified proven natural gas reserves, Chinese state energy giant Sinopec said on Thursday. 

The shale gas reserves at the Qijiang shale field in the southwestern Chinese province of Sichuan are mostly found at 3,500 meters (11,483 feet) underground, according to a Sinopec statement carried by Xinhua.  

The much deeper location of the shale gas reserves in China makes extraction much more challenging than in the U.S., for example.  

Although China is estimated to have a high volume of shale gas resources, topping even those in the United States, its shale gas boom has not yet materialized. 

Unlike in the U.S., the development of shale gas resources in China is much more difficult due to more complex geography and a lack of adequate infrastructure to remote mountainous regions where most of the Chinese shale resources lie. Drilling for shale gas in China requires deeper wells, while fracturing is also tricky because of the mountain terrain and geological constraints.  

Despite these barriers, Chinese state majors have managed to boost conventional and unconventional natural gas production in recent years. Shale gas output has grown by double-digit percentages over the past few years, exclusively due to the national corporations boosting development as per government directive. 

Last month, Sinopec announced a major shale gas discovery in the Jinshi 103HF exploratory well in the Sichuan Basin. With estimated resources of 387.8 billion cubic meters of gas, “it is a major breakthrough for China’s shale gas exploration, and the first discovery in the Cambrian Qiongzhusi Formation,” Sinopec said. 

Increased domestic production of natural gas, weakening gas demand in China, policies to support coal as the “energy security” tool, and of course, the much higher spot LNG prices this year have all combined to reduce Chinese purchases of LNG so far in 2022. China is expected to see an unprecedented slump in its liquefied natural gas imports this year, ceding the world’s top LNG importer status back to Japan.  

By Tsvetana Paraskova for Oilprice.com

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