Yet China's investment in shale gas exploration and development is "very small" in proportion to the country's overall oil and natural gas exploration and development, which totaled more than $9.5 billion last year, Wang Min, vice minister of China's Ministry of Land and Resources said in a ministry report.
"Further measures and investment are needed [for shale gas]," he said.
Wang reiterated a March ministry announcement that China's shale resource potential could reach 25 trillion cubic meters, nearly as much as the country's conventional gas resources. By comparison, the United States has shale gas resources of 24 trillion cubic meters, he said.
As part of its latest 5-year economic plan, China aims to produce 6.5 billion cubic meters of shale gas a year by the end of 2015.
But experts have said that Beijing's goal is too lofty.
Noting that China is "way behind" in well drilling and infrastructure construction for the extraction of shale reserves, Chris Faulkner, chief executive officer of Texas company Breitling Oil and Gas Corp. recently told Bloomberg News that "having reserves is one thing and turning them into a real product is quite another."
In the past year, he said, China has drilled 50 shale gas wells, compared with 1,300 a month in the United States.
Faulkner said it takes 3-5 years for a shale gas discovery to start commercial production.
And compared to shale reserves in the United States, drilling in China will be "at least three times more expensive" because of different geological structures, Faulkner said.
But Shell, which signed a joint venture agreement in March with PetroChina, a Hong Kong subsidiary of China National Petroleum Corp. to explore, develop and produce shale gas in the Sichuan Basin, said it doesn't foresee a problem with China's geology.
"We've taken to China what we've learned in shale fracking in the United States," Royal Dutch Shell Plc CEO Peter Voser told The Dallas Morning News. "The geology's pretty similar. We can use the same skills and equipment."
PetroChina is getting full access to the technology, Voser added, noting that instead of the usual industry practice of contracting out the drilling work to service companies, the two companies will drill wells with their own rigs.
Wang of China's Ministry of Land and Resources said China was getting ready to launch a second bidding round for shale gas, although he provided no timetable. The first shale-gas auction was last July.
Finding investors isn't likely to be a problem for China.
The Dallas newspaper reports that Chevron Corp. is near an agreement with an unnamed Chinese company to explore for shale gas in Guizhou province and last year, Exxon Mobil Corp. carried out a study of Sichuan shale gas with Petrochemical Corp.
Despite his qualms about China's shale sector, Faulkner said his company has been looking for a shale gas partnership in China.
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