China shale gas auction attracts 83 bidders

BEIJING - Land resource authorities said Thursday that 83 companies have bid on the exploration rights for 20 shale gas blocks in a recent auction.

The Ministry of Land and Resources said it had received 152 bids as of Thursday, the deadline for submitting bids. One block received the maximum of 13 bids.

However, one block in east China's Anhui province received only two bids, failing to meet the minimum requirement -- three bids for each block -- for further proceedings, the ministry said.

The auction, which became open to the public on September 10, was the second of its kind after the first auction in June 2011, when six companies bid on four shale gas blocks.

The auctions are part of efforts to boost the production of shale gas, a clean and efficient energy source that is mainly composed of methane.

The shale gas blocks, with a total acreage of 20,002 square km, spread over eight Chinese provincial regions, including Chongqing municipality and the provinces of Guizhou, Hubei, Hunan, Jiangxi, Zhejiang, Anhui and Henan, according to the ministry.

Winning bids will be announced after a group of experts evaluate the bidders' exploration plans, capital budgets and support measures, the ministry said.

According to bidding conditions, domestic companies or Chinese-held joint ventures registered with capital exceeding 300 million yuan (about 48 million U.S. dollars), which are qualified for gaseous mineral exploration, may join the bidding. Each qualified company can bid for two blocks.

Companies that have obtained winning bids must spend at least 30,000 yuan annually on each square kilometer of shale gas blocks during the three-year validity period and drill two wells on every 500 square km of land within the blocks.

Although China does not produce shale gas commercially, the resource has become an increasingly important source of natural gas in developed economies amid volatile global oil supplies.

The country aims to produce 6.5 billion cubic meters of shale gas by 2015. An estimated 400 to 600 billion yuan will be spent to drill 20,000 shale gas wells by 2020, according to the National Development and Reform Commission, the country's top economic planer.

China has rich reserves of shale gas. Reserves are estimated to total 31 trillion cubic meters, equivalent to the country's total amount of conventional natural gas, official data showed.