First phase of key project starts in Sichuan Basin of southwest China

China Petrochemical Corp is planning to boost shale gas output capacity at its Fuling project to 10 billion cubic meters by 2017.

The company, also known as Sinopec, said that the first phase of the Fuling shale gas project in the Sichuan Basin of Southwest China has commenced production with an annual capacity of 5 billion cubic meters.

The project, China's largest shale gas project to date, is the latest sign that China's shale gas sector is revving up as the country seeks to optimize its energy use to reduce emissions.

Sinopec, also Asia's biggest oil refiner, said work on the second phase of the project has started in eight blocks at the site with a total area of 460 square kilometers.

Jiao Fangzheng, vice-president of Sinopec, said that shale gas output from Fuling will bolster the country's energy strategy and achieve large-scale shale gas commercialization soon.

"The fruits that we achieved have given us huge confidence. The extraction and exploration model in Fuling can be duplicated and promoted in many other places," he said.

Though China has rich shale gas resources, high extraction costs, lack of advanced drilling techniques and a complicated terrain have hindered development.

But the country is taking huge steps toward tapping its shale gas potential with higher localization of key equipment and steps to cut carbon footprint and the excessive reliance on coal.

The costs of drilling a single shale gas well have fallen by 20 percent from a year ago in China, Jiao said.

Huang Zhongyao, deputy manager of Sinopec Chongqing Fuling Shale Gas Exploration and Development Co Ltd, said that the company has put great efforts in research to localize the key equipment for shale gas development.

"In the past, we had to import all the key equipment and the price was really high," he said. "Now we have developed our own technologies and equipment."

Due to the complex geographic structure in the Sichuan Basin area, the company is facing more challenges in drilling gas from below the ground than its peers in North America.

The average depth of the wells in Fuling is between 2,400 meters and 2,800 meters, while in North America, most wells are less than 2,000 meters deep, Huang said.

"Our deepest well is 4,200 meters," he said.

The current daily production at the Fuling site, which has 380.6 trillion cubic meters of proven shale gas geological reserves, is enough to meet the daily needs of 32 million residents.

Experts said shale gas is likely to become a game changer in China's energy mix just as what happened in the United States, given the huge potential of shale gas exploration in the country.

Currently China's natural gas accounts for a mere 5.5 percent in the primary energy consumption, much lower than the world's average natural gas consumption of about 24 percent in the energy mix.

Contact the writers at lvchang@chinadaily.com.cn and tanyingzi@chinadaily.com.cn