........Significant Commercial Production "At least Ten Years Away"
By John Richardson
A US-China Shale Gas Training Programme has been launched by the independent White House agency, the US Trade & Development Agency (USTDA).
An initial $378,000 will be invested to enable the US industry to travel to China and "help introduce Chinese energy sector officials and project sponsors to US shale gas best practices, policies and technologies," said the USTDA.
This all part of a US-China Shale Gas Resource Initiative that dates back to March 2009, following a meeting between President Obama and China's former President, Hu Jintao.
So what does this mean?
The blog's first thoughts were that there could be something geopolitical here - for example, helping to make China more energy independent, thus lessening its needs to seek energy resources overseas, backed up by greater spending on defence. This would put a strain on the US as it, perhaps, tries to reduce its own defence spending as part of balancing the budget.
But before we get too carried away, this might be purely commercial, as the following interview with a gas consultant suggests.
US support is sorely needed, by the sound of it, because of challenges of developing China's huge shale-gas resources, which we have discussed before.
China's shale-gas industry, and with it any wet gas feedstock for petrochemicals, seems to be at least a decade away from significant commercial production.
The consultant told us: "There are a lot of government-to-government connections between the US and China over shale gas, but I don't think this is geopolitical.
"This is being driven by collaboration between, say, a university in the US, one France and one in China to develop new shale-gas techniques that will be commercialised and, hopefully make money for companies in all three countries, while solving China's shale-gas problem.
"One of China's shale-gas problem is that its shale has a high clay content, and so in the worst-case scenario, you would be pumping chemicals and water in order to produce nothing more than a frothy, blancmange-style mess that has no commercial value.
"The US is a much more fortunate position as its shale is impermeable, very hard, and so it is much easier to frack.
"Thus, solving China's problem will quite possibly require new fracking techniques, new drills and new fracking fluids.
"The objective of the Chinese is to develop these technologies for domestic applications, with the eventual aim to sell them overseas.
"There has been a lot of talk about China being on the fast-track in terms of shale-gas development, but it doesn't look much look like a fast track to me.
"There have been two auctions so far, the first one of which was closed to all but a few Chinese companies with the second widened-out to more Chinese companies. But neither auction has allowed in foreigners and they need the foreigners for the technology.
"And so, a Chinese company has to first of all win an auction, and then find a foreign partner, which slows the whole process down.
"China's Ministry of Land has come out with a very ambitious target of producing 80-90 billion cubic metres a year of shale gas by 2020.
"From first identification through to significant commercial production of any gas resource normally takes ten years. China shale is likely to take more than ten years because of all these impediments."
A March 2012 Barclays Capital report said that China had set itself a target of producing 6.5 billion cubic metres per year of gas by 2015, accelerating to 600-100 billion cubic metres a year by 2020. This suggests that China is banking on some major technological breakthroughs.