Shale gas industry on the rise in China

WUHAN - In China's financial hub Shanghai, kitchen stoves now use a new energy source: shale gas, a clean energy that travels more than 1,600 kilometers to the city's homes via a series of pipelines.

China has recently made breakthroughs in shale gas exploration, both in capacity and drilling techniques, as the country moves to adjust its energy structure from its reliance on coal, which has been blamed for the foul air.

Sinopec, China's largest oil refiner, announced on Tuesday that its Fuling shale gas project in southwestern Chongqing Municipality achieved annual production capacity of 5 billion cubic meters.

This makes China one of the world's biggest shale gas developers, second only to the United States.

The new energy is transferred to eastern areas like Shanghai, while also powering the middle and southern parts of China via Sinopec's pipelines.

In the mountains of Chongqing's Fuling district, 253 tall drilling wells are working day and night over an area of more than 220 square km, with 174 wells constantly transferring shale gas across China. It was only three years ago that shale gas was first extracted from the field.

"I think the burning fire from the first drilling well in 2012 not only lit up hopes of shale gas commercialization, but really, really empowered our confidence in its future exploration," said Yang Guosheng, general manager of Sinopec Jianghan Oilfield Service Corp (SJOSC), a Sinopec subsidiary in charge of the Fuling field development.

Shale gas on the rise

First extracted as a resource in the US in 1921, the highly efficient energy has been applied in a variety of sectors, including heating, power generation, automobiles and chemical production. China has about 26 trillion square meters of shale gas reserves, the largest in the world.

While regular natural gas is extracted from sedimentary rocks, shale gas, mainly methane, comes from delicate shale formations, making the new energy resource difficult to extract with traditional methods.

China began extracting the resource in 2011, with Sinopec building the first shale gas well in the central province of Hubei, but the process proved no easy task.

"Traditionally we use vertical wells for gas drilling, but because the gas is stored in shale formations, we have to use horizontal wells," said shale gas expert Zhang Liangwan. "So we are talking about a well with a right angle and placing it deep down," he said.

Sinopec failed to extract any shale gas from its Hubei project, but the company began to accumulate experience from the process.

"The well that helped extract the first shale gas at Fuling relied upon American technology, but if we were to develop the industry, we had to use our own and break their monopoly," said Yang Guosheng, SJOSC general manager.

After a series of trial and errors, the team gradually took control of the drilling and began to develop their own techniques by using a geological positioning technology, known as LWD, in the drill bit, which really sped up the whole process.

They also developed equipment that fractured the formations around the horizontal well, allowing gas to flow through safely.

Within just three years, the firm has secured 24 national invention patents, with some key technology such as a down-hole bridge plug even exported to North America.

"We exported 6,000 of our plugs to North America last year," said SJOSC Party secretary He Kaiping.

Despite the breakthroughs, there is still room for improvement in the industry, with total shale gas output accounting for less than 1 percent of natural gas production, while that number stands at 35 percent in the United States.

"The efforts we are making in the industry will help China adjust its energy structure and solve many problems caused by coal burning, such as smog," He said.

Sinopec said on Tuesday that production capacity will improve, and there were plans for a large-scale gas field with annual production of 10 billion by 2017. If that goal is hit, it could help bring down China's carbon dioxide by 12 million tons annually, equal to removing 8 million cars off the roads.