China to scale down shale gas target

Chance of meeting 2015 target is zero.

Analysts said the lack of investment from utilities, oil companies, other energy groups and other developers will push China to reconsider its target and be more realistic.

Zhang Dongxiao, director of Beijing University's Oil & Gas Research Institute, said China's chance of meeting its 2015 shale gas target is "zero." China has an estimated 1.1 quadrillion cubic feet of shale natural gas reserves.

China's 12th five-year plan calls for natural gas to provide 8% of China's energy mix in 2015 and 10% in 2020. China also aims to produce 6.5 billion cubic meters of shale gas a year by 2015.

The government, however, said that development is a challenge as most Chinese shale basins are tectonically complex with numerous faults and are not conducive to shale development. It also cited the high cost and rudimentary state of domestic horizontal drilling and fracturing services.

PetroChina and Sinopec are the only Chinese companies with notable natural gas development experience and pipeline capacity. PetroChina has a domestic shale gas production target of 1.5 billion cubic meters by 2015 and Sinopec's is 0.13 billion cubic meters.