Shale gas in China: some delays for a strong take-off? By Nabila Chafai
Introduction
achievement of Chinese gas production targets,
consumer. Since the early 2000s, the country’s
particularly for shale gas. Shale gas production
rapid economic growth has led to a significant
in China started in 2014 with small quantities
increase in energy demand. Although gas
(0.6 bcm) and targets up to 2040 are very high
remains low in the energy mix (6% in 2015)
aiming to satisfy 11% of total gas demand. The
relative to competing energies, notably coal
New Policies Scenario (NPS) in IEA’s World
(66% in 2015), the growth in demand bears
Energy Outlook 2015 (WEO) predicts that China
witness to the increasing gas needs in China.
could produce 30 bcm of shale gas in 2020 and
Between 2007 and 2013, gas demand in
90 bcm in 2040. But lower prospects for gas
China more than doubled, mainly driven by
demand growth in China lead us to ask some
three sectors: industry, residential and power
questions about the targets for gas production,
generation, propelling the country to third
in particular for shale gas in the medium and
place in the world rankings after the USA and
long term. In 2014, the Chinese government
Russia in terms of gas consumption. But by
reduced shale gas production targets for 2020
2014, the economic downturn in China led to a
by 50% to 30 bcm from 60-100 bcm. This
reduction in the rate of growth of energy and
revision raises the question, in particular, of the
gas demand, with the country investing more
volume of pipeline and LNG imports needed to
in services and less in industry. Gas demand
satisfy gas demand, as well as the production
growth fell from a double-digit rate to 9.6% in
volumes of shale gas for 2020 and beyond.
2014 and 4.7% in 2015.
x Figure 1.
These elements cast doubt about the
China is a major gas producer, importer and
With this in mind, IGU’s Gas Markets Committee Study Group 1 investigated gas demand scenarios and assessed their impact on
Bcm
Historical gas consumption and production in China
Chinese gas supply up to 2040 looking at conventional gas, coal-bed methane (CBM),
200 180 160 140 120 100 80 60 40 20 0
shale gas and gas imports by pipeline and LNG. In order to carry out these calculations, version 3.12 of Nexant’s World Gas Model (WGM) created in May 2016 was used. Two scenarios were modelled: a base case where gas demand corresponds to IEA’s NPS and a low demand scenario utilising 2016 data from the Oxford Institute of Economic Studies (OIES) where 2001 2003 2005 2007 2009 2011 2013 2000 2002 2004 2006 2008 2010 2012 2014 Consumption
Production
Source: BP Statistical Review of World Energy.
60 S h a l e g a s i n C h i n a : s o m e d e l a y s f o r a s t r o n g t a k e - o f f ?
cumulative gas demand in China over the period 2015-2040 is 16% less. The conclusion of the study is that in the low demand scenario total gas production (including shale gas pro duction) over the period 2015-2040 is 10% less
