Shell to drill for shale gas in China

Royal Dutch Shell Plc intends to participate in drilling for 25.1 trillion cubic meters of shale gas in China.

This amount could meet China’s gas demands for 200 years. Lim Haw-kuang, executive chairman of Shell China Group, said Shell is awaiting the second shale gas tender later this year. The bidding process, however, could begin as early as late July.

Shale gas is a type of unconventional natural gas trapped within shale formations deep underground. It is used as a fuel to generate electricity in power plants.

The second public tender may open the sector partially to foreign companies. Shell, however, said it is not yet registered as a bidder.

In March, Shell signed China's first shale gas production sharing contract with China National Petroleum Corporation, the nation's biggest oil company. Both sides will cooperate to develop and produce shale gas in the Fushun-Yongchuan block in the Sichuan Basin, an area covering about 3,500 square kilometers.

Compared to the first auction, which offered four blocks, the second tender may offer about 17 blocks, located in areas including the provinces of Hunan and Anhui.

China is estimated to have 25.1 trillion cubic meters of exploitable shale gas resources, exceeding the 24.4 trillion m3 reserves in the United States, and making it the country with the world's biggest reserves.