In-brief evaluation
September 30, 2024
Data supply: Advanced Resources International, Inc.
China is a significant natural gas importer by pipeline and the world’s largest importer of liquefied natural gas (LNG). In the final 10 years, the Chinese authorities has actively supported the event of unconventional natural gas assets to scale back import dependence and improve power safety.
According to a report from S&P Global Commodity Insights (SPGCI), the China National Petroleum Corporation (CNPC) in 2023 produced natural gas from shale within the Low Cambrian formation within the Sichuan Basin at a depth exceeding 14,760 ft, marking the primary time that commercially viable natural gas was produced from this deeper formation. SPGCI reported that the Zi 201 well initially produced 26.1 million cubic ft per day (MMcf/d), a business price that would signify the entry of the Cambrian formation into a brand new section of large-scale shale gas improvement.
Currently, solely two of China’s nationwide oil corporations—CNPC and the China Petroleum and Chemical Corporation (Sinopec)—produce shale gas, primarily from the prevailing fields within the Silurian Longmaxi formation of the Sichuan Basin. At a mean depth of 11,500 ft, the Silurian Longmaxi shale formation is shallower than the Low Cambrian.
China’s home shale gas manufacturing averaged 2.51 billion cubic ft per day (Bcf/d) in 2023, up from 0.02 Bcf/d in 2013, in keeping with information compiled by SPGCI. Since 2013, Chinese corporations have gained a higher geological understanding of shale formations and deployed extra superior hydraulic and automation methods, steadily rising shale gas manufacturing. However, we estimate that shale gas accounted for simply 12% of China’s home natural gas manufacturing of 21.7 Bcf/d in 2023 as geological and price points have hampered extra speedy improvement. In 2023, China’s natural gas imports averaged 16.0 Bcf/d and accounted for 42% of China’s whole natural gas provide, in contrast with 15% of its provide in 2010.
Data supply: S&P Global Inc., S&P Global Commodity Insights, 2024; Sinopec, Annual Report 2023
Note: Sinopec=the China Petroleum and Chemical Corporation; CNPC=the China National Petroleum Corporation
In 2018, the Chinese Ministry of Finance and the State Administration of Taxation launched a preferential tax coverage to scale back the useful resource tax on shale gas manufacturing to 4.2% from 6.0%. Last 12 months, this coverage was prolonged by way of December 2027.
Following the discharge of China’s 14th Five-Year Plan in 2021, coverage directives continued to help improvement of unconventional natural gas assets. Production from unconventional formations, corresponding to tight gas, shale gas, and coal-bed methane in China averaged 8.6 Bcf/d in 2023.
Currently, China is one in all 4 international locations on this planet the place business volumes of shale gas are being produced. The others are the United States, Canada, and Argentina. Our World Shale Resource Assessments report of 2015 estimated 1,115 trillion cubic ft of technically recoverable shale gas assets from the seven most potential of China's natural gas basins. More than half of those assets are within the Sichuan Basin (626 trillion cubic ft). The southwest area of the Sichuan Basin dominates China’s shale leasing and drilling exercise as a result of it provides China’s greatest mixture of favorable geology, flat floor circumstances for accessibility, current pipelines, ample water provides, and entry to main city natural gas markets. Other components of the Sichuan Basin are structurally or topographically complicated or have elevated hydrogen sulfide (H2S) contamination that makes business shale gas improvement more difficult.
Principal contributors: Faouzi Aloulou, Victoria Zaretskaya
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