Halliburton eyes opportunities in China's shale gas industry
Financial incentives from Beijing to help companies cope with the challenge of extracting resource embedded in underground rock
Some of the barriers to faster development on the mainland of shale gas - natural gas trapped between shale rocks - can be mitigated by policy incentives, technology, and supply chain management, according to an energy executive.
Lamar Duhon, vice-president of business development in Asia at US-based oil services firm Halliburton, said Beijing's decision to give financial incentives to explorers of shale gas would help them cope with the challenges of exploiting the clean energy resource. The mainland has large shale gas reserves but the industry is in its early stages of development
"Some of these challenges are within the government's control, and the government has signalled a desire to accelerate unconventional energy development, specifically with the Ministry of Finance's operator production incentives," Duhon said in an interview with the South China Morning Post last month.
The ministry said last November it would give shale gas producers a subsidy of 40 fen per cubic metre of gas sold. The handout lasts until 2015.
This amounts to 35 per cent of PetroChina's ex-gas-field selling price last year, or 1.13 yuan per cubic metre. The firm produces about 70 per cent of the nation's output of the gas.
Industry executives highlighted a water shortage, a lack of entrepreneurship in the state-dominated industry, a lack of private mining rights, a high population density, and underdeveloped gas pipelines as impediments to shale gas exploitation in China.
Fu Chengyu, chairman of oil and gas firm China Petroleum & Chemical (Sinopec), said in August the shale gas industry would still be in an early stage of development for the next five years.