POWER January 2014 - 44

POWER IN CHINA
exploration and development costs, a long investment recovery period,
and difficulty in realizing short-term economic benefits.
Policies are needed to encourage strategic survey and exploration
and development of shale gas resources, as has been the case in the
U.S. and other countries. The national financial sector should increase
investment in a strategic survey of shale gas resources and encourage
private investment in shale gas.
In addition, various favorable tax and fee policies should be formulated
similar to the domestic development of CBM to promote shale
gas development. At the same time, government should increase subsidies
for exploitation of shale gas and launch preferential policies for
key technology research, development, and promotions.
Improve Key Technical Abilities. Investment in science and
technology should be increased to promote technological innovation.
We suggest organizing advanced technological forces to
carry out key technology research on shale gas exploration and
development and to encourage enterprises to develop, promote,
and use new technologies and processes that can improve the efficiency
of shale gas development. Additionally, the techniques of
reservoir evaluation, perforating optimization, horizontal wells,
and fracturing should be introduced and improved. Formulation
of technical standards and specifications of shale gas should also
be accelerated.
Accelerate Pipeline Network Construction. We recommend
that the government develop comprehensive plans for and
build a nationwide and regional natural gas pipeline network.
Both more miles of natural gas pipelines are needed and an appropriate
proportion of trunk pipelines and distribution pipelines.
The Chinese government also should strengthen regulation
of its pipeline network. For example, a nondiscriminatory access
policy should be rolled out if it wants to decrease transportation
costs for shale gas.
In order to meet the needs of the developing shale gas sector, construction
of pipelines should speed up.
Another need is equitable entrance mechanisms for the natural gas
pipeline network and timely mandatory introduction of third-party
access provisions.
Construction of small liquefied natural gas and compressed natural
gas facilities will also be needed, especially for development areas
farther from the natural gas pipeline network, to minimize transportation
costs.
As shale gas development advances, construction of export pipelines
may be needed.
Shale Gas Is Nationally Important
China needs to speed up legislation concerning the management of
shale gas resources, establish technological standards for shale gas
development, introduce competitive mechanisms, improve foreign
cooperation, strengthen supervision, and maintain an orderly and
healthy level of shale gas exploration and development.
The Shale Gas Development Plan (2011-2015) issued by the National
Energy Board identified shale gas development goals:
■ Basically complete the investigation and evaluation of shale gas resource
potential, understand the distribution of shale gas resources,
and optimize 30 to 50 prospective shale gas areas and 50 to 80
favorable target areas.
■ Mostly complete the national shale gas resource potential survey
and evaluation in 2015, exploring shale gas geological reserves
of 1 trillion cubic meters, recoverable reserves of 200 bcm, and
achieving an annual output of 6.5 bcm.
■ Establish geological survey techniques and resource assessment
technical approaches for shale gas that are suitable for geological
conditions in China as well as key technologies for shale gas
exploration and development and ancillary equipment.
Commercial development and utilization of shale gas in China can
be divided into three stages:
■ First stage-before 2015: pilot testing and developing key
technologies.
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■ Second stage-2015 to 2020: focusing on the development of marine
shale gas at scale in southern China and recognizing a breakthrough
in the industrial development of continental shale gas and
realizing its scale development and utilization. Shale gas production
is expected to reach 20 bcm in 2020.
■ Third stage-after 2020: forming supporting technologies and effective
management systems and mechanisms for shale gas exploration
and development suitable for the characteristics of China's
unconventional gas. The goal is to make shale gas a new force to
support rapid development of China's natural gas industry within
10 to 20 years.
Although large-scale development of shale gas will take time, actively
looking now for shale gas resources is imperative for national
energy security reasons. As we look forward to the future, the development
of China's shale gas has broad prospects.
The authors would like to sincerely thank Wang Liang for guidance
with the English writing. ■
-Zeng Ming, Liu Ximei, and Li Yulong, School of Economics and
Management, North China Electric Power University,
Beijing, China.
www.powermag.com
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POWER January 2014

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