OREANDA-NEWS. November 28, 2014. China has sharply cut its output target for shale, signaling the country’s drilling boom is fizzling out before it even gets going.
 
The nation has reduced its goal for the end of the decade to a third of an earlier estimate, as difficult geology, lack of infrastructure and limited exploration rights conspire against shale-gas ambitions. Big gas import deals, a lower oil price and China’s commitment to clean energy are also weighing on shale’s promise.

“It’s a reality check for policy makers who’ve finally realized the shale gas boom may not come as easily as many thought,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. “Progress has been made in many areas, but none of them are big enough to trigger a shale revolution.

China, which has the world’s largest shale gas reserves, awarded 18 companies exploration rights in two auctions in 2011 and 2012, in an attempt to replicate the U.S. shale boom and cut its reliance on imports. Only one of these, state-owned energy giant China Petroleum & Chemical Corp. (386), has started to commercially produce the fuel. It’s bigger rival, PetroChina Co. (857), is also producing shale gas from its own reserves.

Earlier this week, China’s State Council, its top decision-making body, cut its 2020 output goal to “over 30 billion cubic meters” from as much as 100 billion cubic meters, confirming earlier reports that China had scaled-back its target.