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US firm set to boost Chinese shale gas E&P

12th September 2012

US energy giant ConocoPhillips will help China, home of the world’s biggest shale gas reserves, unlock its potential and creep one step closer to hitting its ambitious 2015 production target, it emerged this week.

US technology and expertise will prove vital in unlocking China's vast reserves of shale gas

ConocoPhillips is looking into expand its China operations to include shale gas in a move which could help the resource-rich country boost exploration and development of the fuel in the same way the US has done over the past decade.

The announcement comes after Beijing said this week it would hold shale gas auctions in October. Sites available cover 20,002 square kilometers and are in Chongqing municipality and the provinces of Guizhou, Hubei, Hunan, Jiangxi, Zhejiang, Anhui and Henan, according to today’s statement. Each participant is allowed to bid for a maximum of two blocks.

The government wants to see US energy firms form partnerships with domestic companies to initiate the level success that the US shale gas market has seen in the past 10 years. China has set an ambitious target to produce 229.5 billion cubic feet a year of shale gas by 2015.

ConocoPhillips, which currently holds stakes in Chinese offshore drilling projects, is "looking into expanding into shale" in the country, Mark Nelson, ConocoPhillips's vice president of commercial and sustainable development, said.

Nelson spoke on the sidelines of the US-China Oil & Gas Industry Forum in San Antonio, where Chinese government officials and energy executives met with their US counterparts to discuss energy policy and attempt to form partnerships.

ConocoPhillips, Chesapeake Energy Corp., EOG Resources and others have used advances in drilling technology to unlock natural gas from shale formations throughout the US, sending the country's natural-gas output to 66 billion cubic feet a day in 2011, up from 56 billion cubic feet a day in 2001, according to the US Energy Information Administration.

Without shale gas, which accounts for about 40 per cent of domestic natural-gas output, production of the commodity would have declined and the US would have had to import massive quantities of liquefied natural gas, experts say.