China's Five-year Shale Gas Development Plan Seems Optimistic

China released a five-year shale gas development plan for the 2011-2015 period in March 2012 with a target of reaching 6.5 billion cubic meters (bcm) of shale gas production per year by 2015. Additionally, the plan aimed for the completion of a two-year survey and appraisal of shale gas reserves within the plan period, increase China’s expertise on technologies and equipment required for the exploration and production of shale gas, and the development of a policy framework for the regulation of the country’s shale gas sector. However, the planned target of 6.5bcm of shale gas production per year by 2015 seems unfeasible, considering the complex geology of the shale gas reserves in China. The complex geology of shale reserves implies higher cost of development of shale gas, turning companies to focus more on other unconventional or conventional sources of natural gas. Additionally, several factors such as water shortages, insufficient natural gas pipeline infrastructure, government control over natural gas prices and environmental issues will be primary obstacles to achieving the objectives of the five-year shale gas development plan.

Scope

- The report discusses about the feasibility of China’s five-year shale-gas development plan.

Reasons to buy

- To gain understanding of China’s five-year shale gas development and obstacles for achievement of targets laid out in the plan.

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