Two decades before Exxon's $30 billion bet placed shale gas squarely on the world map, Mitchell's Texas oil company pioneered horizontal drilling and hydraulic fracturing, a resource-intensive industrial process that drillers and their environmental critics shorten to "fracking."
Learning 'fracking' on the run
Producers inject millions of gallons of water, sand and chemicals at a high pressure into wells drilled some 8,000 to 10,000 feet deep and close to a mile in one direction. It fractures and "stimulates" the porous shale rock, tight gas or coal-bed methane deposits, coaxing gas to the surface.
It took Mitchell 20 years to cajole enough gas from the Barnett Shale field underneath eastern Texas to make it a big business. China wants to do the same thing in the giant 81,000-square-mile Sichuan Basin, only faster.
China's capacity to build energy infrastructure by injecting financial and regulatory support means that China could carve hundreds, if not thousands, of wells out of Sichuan's fertile countryside by 2020. In the next four years, PetroChina says it plans to build 220 gas wells in the same area as it built its first.
If China opens the spigot for shale gas developers, there are significant deposits in Inner Mongolia in the north and particularly in China's restive Western frontier, Xinjiang, which suffers from severe droughts, water shortages and a separatist movement.
A report last spring, commissioned by the U.S. Energy Information Administration (EIA), estimated that China holds 1,275 trillion cubic feet (tcf) of technically recoverable shale gas reserves, compared to 860 tcf of shale gas in the United States.
But drilling thousands of wells -- as wildcatters, small independent producers and oil giants did across Texas, Arkansas, Louisiana and Pennsylvania in the past decade -- will be a lot harder in China, sources emphasized during interviews with ClimateWire conducted in the United States and China.
"A year ago, we were saying that we expected the buildup of shale to be conservative and incremental," said Gavin Thompson, director of China gas research at Wood Mackenzie in Beijing. "Twelve months later, we haven't seen much progress."
Secretive environmental data
Exploration, seismic and environmental data out of China's shale fields are murky, either because the right information isn't being collected by regulators or because it's buried in closely held exploration and drilling reports. It's an industrywide concern underscored in the EIA report, drafted by Advanced Resources International (ARI), an Arlington, Va.-based research firm. "Reservoir quality remains uncertain, while in-country shale drilling and completion services are still nascent," the report says.
Analysts there predict it will take five to 10 years for production to reach "material levels," but include significant caveats to suggestions by PetroChina, Shell and others that a shale boom is on the horizon.
"We would give it a much bigger haircut because of the geological complexity," said Scott Stevens, a co-author of the ARI report who has worked on gas projects in China for 20 years.
At times, there is more than meets the eye. At a visit to the PetroChina site in Weiyuan, the site south of Chengdu in south-central China, a drilling pipe in the middle of a soaring rig spun slowly as officials observed what appeared to be an active drilling operation. Yet a progress report, viewed by a Halliburton employee days earlier, indicated engineers had been forced to stop operating after the drill head broke off a mile underground.
Shale gas in China could trump imported LNG or gas piped from Turkmenistan on price, said Western energy analysts, but not until China gets better at drilling wells, or hires outside help. It took PetroChina 11 months to complete its first horizontal well last spring. "That's time and money," Stevens said.