Due to recent production surges and developments by major state-owned exploration companies, China is back on track to meeting its 2015 shale gas production goal, according to a report by GlobalData. However, its 2020 target remains in question, as shale gas ecosystem development has proven sluggish. In an attempt to reach these goals, GlobalData says the central government has decided to reform the industry further with a series of policy updates.
Based on non-residential city gate pricing and financial incentives expected to be set by the Chinese government, GlobalData was able to evaluate one of China’s shale blocks known as Sinopec’s Fueling project, and they projected a 7.1 percent internal rate of return and a break-even price of $7.77 per thousand cubic feet.
According to Howe Wang, Upstream Analyst for GlobalData, a combination of political, technical and financial issues are impeding further development of China’s shale gas industry.
Wang also says that the need to fuel China’s fast-growing energy demand is pressuring the government to accelerate domestic shale gas development. As a result, more foreign collaboration is being facilitated to encourage various investment bodies to enter the market, and 2020 production goals of 5.8 billion cubic feet per day (bcfd) to 9.7 bcfd have been set.