China recently discovered that it has the largest shale gas reserves of any country in the world. Shale gas is a type of natural gas that is trapped within the microscopic pores of shale formations in the ground. Royal Dutch Shell CEO Peter Voser claims that the oil & gas company will spend $1 billion in the near future to develop China’s massive shale gas reserves in the Fushun-Yongchuan block in the Sichuan basin. Shell won government approval to set up a joint venture contract with China’s largest petroleum company, China National Petroleum Corp (CNPC). China is attempting to score hydraulic fracturing technology from Shell, much like when the Chinese wanted automotive technology from foreign firms in American Wheels Chinese Roads. Drilling for shale gas will also boost China’s economy and create many domestic jobs. Natural gas currently provides under 5% of China’s primary energy consumption, while coal provides over 70% of China’s primary energy consumption. But natural gas is a much cleaner source of energy than coal, so pollution will be positively impacted if Shell and CNPC’s joint venture operation is successful and the proportion of natural gas increases.
Source: Bloomberg News