This Oil Giant Is Out To Achieve China’s Shale Gas Dream

China has the world’s biggest shale gas reserves and an ambitious 2015 target which could become a reality if Sinopec (NYSE:SNP), which has started pumping shale gas in commercial quantities, delivers on its promise. 

The improvements in drilling technology, which led to a boom in the U.S shale gas production, have drastically changed America's energy landscape. The unconventional gas now forms a substantial part, nearly40%, of the total U.S dry natural gas production. Both, U.S and Canada, have enormous reserves of technically recoverable shale gas but according to the U.S Energy information Administration, China is home to the world’s biggest recoverable shale gas reserves. In fact, China is also the only country, besides the U.S and Canada, which produces shale gas in commercial quantities. However, unlike the two North American nations, in 2012, China’s shale gas output was less than 1% of its total natural gas output. 

China severely lacks in infrastructure which is one of the key hurdles in achieving the country’s dream to emulate the U.S shale gas boom. However, the state owned oil giant Sinopec Corp (SNP) is undeterred. In a significant development for China and Sinopec’s shareholders, for the first time ever, Sinopec started pumping shale gas in commercial quantities from the test well.

Hunting for Shale Gas

Sinopec drilled around 30 pilot wells for shale gas in the China’s southwest area called Fuling. This area is a part of the Sichuan Basin that is considered as one of the most resourceful areas of shale gas reserves. According to the company officials, Sinopec is pumping around 1.06 million cubic meters of gas at a daily combine rate, in other words, around 180,000 cubic meters on an average from each of its wells. In fact, one of these wells has a daily production rate of around 547,000 cubic meters. …. Read full article at GuruFocus