Original Source – OilPrice.com
China’s Natural Gas Demand Set to Triple by 2040
China’s demand for natural gas will more than triple over the next 25 years, according to a new report from the U.S. Energy Information Administration.
Natural gas demand in China is projected to hit 17.5 trillion cubic feet (tcf) in 2040, a greater than three-fold increase from the 5.2 tcf of demand in 2012. There is a big question mark over how the country will meet that need, but the EIA says the vast majority of it will come from two sources: domestic production and liquefied natural gas (LNG) imports.
China is potentially sitting on 1,115 tcf of technically recoverable shale gas – the world’s largest reserves. While energy rich, China has had trouble developing its mammoth shale resources. The lack of fresh water is an enormous challenge. But so is a lack of infrastructure, dearth of pipelines, complex geology, and high costs. The problems have tempered China’s ambition, and the government recently downgraded its 2020 production target by half.
Overcoming these challenges will require the experience and technical skill of experienced players – veterans of the U.S. shale revolution. China decided to up the incentives to attract international investment. “Chinese oil companies are giving U.S. firms a bigger stake in exchange for the tools and technology of hydraulic fracturing,” according to Collin Eaton of The Houston Chronicle.
Joint ventures with American companies will allow China to access some of the tools that fueled rapid growth in the U.S. – pressure pumps, horizontal drilling, multiple wells per pad, and water-efficient equipment, for example. Halliburton and other oil services firms are taking advantage of China’s urgent need to ramp up natural gas production. Halliburton is working with STP, a Chinese company, to frack the Tarim Basin in northwest China.
The EIA predicts that China will be able to overcome many of these hurdles and produce 10.1 tcf of natural gas by 2040, or the equivalent of 58 percent of demand.
What is not met by domestic production will need to be imported. Although only a small fraction of demand at this point, China’s imports of LNG are set to skyrocket in the coming decades. Much of this will come from Australia, which will dominate LNG trade for the foreseeable future, but U.S. LNG exporters…