China Stumbles in Race to Catch Up to US Shale Boom
Walter Russell Mead
The American Interest
July 3, 2013
China’s shale gas reserves—the largest in the world—are nearly double the size of America’s, but the country isn’t even close to catching up to the US shale boom, as analysts say it will be woefully short of self-imposed drilling targets. It turns out that simply having the resource under territory you control isn’t enough to get you a seat on the shale bandwagon. The FT reports:
The Chinese government is targeting 6.5bn cubic metres of shale gas production in 2015, two per cent of Chinese gas production, but a growing consensus in the industry believes this target will not be met.
“At the beginning we all thought it would be quite easy to meet that goal,” said Lin Boqiang, an energy economist at Xiamen University, pointing out that the goal was relatively low to begin with. “But judging from the situation now it doesn’t look that easy to achieve.” America was uniquely qualified to take advantage of shale energy. North America’s geology is well-suited to horizontal well drilling, composed of relatively neat layers of rock stacked on top of one another like a wedding cake. China’s geology is more complicated and varies from region to region. China also lacks the technical expertise and large pool of capital that America enjoys. Finally, and perhaps of most concern to Beijing in the long run, China’s water resources are already strained; fracking uses a lot of water, and in a country where rivers are drying up by the tens of thousands, there isn’t much to spare for shale drilling.
Over time, China will figure out how to get around some of these obstacles. But meanwhile the US can take comfort in knowing that its status as king of shale is secure.
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