China is set to double its natural gas production by 2040, but challenges in developing shale gas resources have led to a lower production outlook and expectations of more imports in the long term, Wood Mackenzie said on Wednesday.
China’s domestic natural gas supply is forecast to double to 325 billion cubic meters (bcm) in 2040 from 149 bcm in 2018, according to Xueke Wang, a consultant at Wood Mackenzie. Yet, this latest forecast for 2040 is 39 bcm lower than WoodMac’s previous outlook, mostly dragged down by lowered forecasts for shale gas and coal bed methane (CBM) production, Wood Mackenzie said in its recent research.
“While we are positive on conventional and tight gas output, the long-term growth of CBM and shale production looks to be challenging,” Wang said in a press release.
China’s biggest energy producers have started to tap more tight oil and gas wells recently, aiming to increase domestic oil and natural gas production at the world’s largest crude oil importer. As part of a government push to boost domestic energy supply, China National Petroleum Corporation (CNPC) and Sinopec are raising investments to increase local oil and gas production and are accelerating drilling at tight oil and gas formations in western China. Related: The Real Reason Why US Oil Production Has Peaked
China’s shale gas production in 2018 amounted to 10 bcm, accounting for 7 percent of the country’s natural gas production, WoodMac has estimated. While Sinopec has made progress in cutting costs at its Fuling shale gas field over the past decade, this success would be hard to replicate because of the different geological structures even in the same formation, the energy consultancy said.
Challenging geology, insufficient infrastructure, and low well productivity are set to result in China badly missing its own shale gas production target to 2020, analysts including WoodMac said earlier this year. China will produce 15 bcm/year of shale gas by 2020—significantly lower than the government’s target of 30 bcm, Wood Mackenzie said in April.
In the research published today, WoodMac’s Wang said: “The overall reduction in China’s gas production outlook calls for greater need for imports in the long term despite a more modest demand growth rate. This should drive China’s growing appetite for LNG and hence influence global gas spot prices.”
By Tsvetana Paraskova for Oilprice.com
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