China'a domestic gas production is expected to more than double from 149 billion cubic meters (bcm) in 2018 to 325 bcm in 2040, according to global energy consultancy Wood Mackenzie's estimates on Wednesday.
The gas production forecast has been revised down from the previous outlook and is now anticipated to be 39 bcm lower.
The data shows that although China is set to become the world’s third largest gas producer by 2027, China’s imports will still grow in the long term.
"One key contributing factor is lower forecast in domestic gas production particularly in shale gas and coal bed methane (CBM), Wood Mackenzie's recent research showed.
It underlined that China produced 10 bcm of shale gas in 2018, or 7% of total gas production.
"Despite well-developed infrastructure in the Ordos basin, shale rich basin, well yields are extremely low, primarily because of the inferior reservoir properties," the report stated, and added in the Tarim basin, a few shale gas explorations have been carried out over the past five years. The desert environment and limited infrastructure add to the list of challenges," the statement highlighted.
Commenting on the data, Xueke Wang, a consultant at Wood Mackenzie, explained that to stimulate shale gas development, China has reduced resource tax on shale gas and urged Chinese national oil companies (NOCs) to upgrade drilling plans.
Wang said that China Petroleum & Chemical Corporation or Sinopec - a Chinese oil and gas enterprise, plans to spend RMB60 billion (US$8.38 billion) in 2019, a 41% increase year-on-year in capital expenditure (CAPEX) on exploration.
"Despite this, we have downgraded the long-term shale gas forecast to 88 bcm in 2040, which is 44 bcm lower compared to our H2 2018 view," Wang added.
Regarding coal bed methane (CBM) production, which stayed flat in 2018, he said "with output limited by project economics, and technical and regulatory conundrums, CBM production is expected to reach 15 bcm in 2040, a 40 bcm reduction from Wood Mackenzie’s previous forecast."
In contrast, tight gas, though also an unconventional resource, has become a core part of China's gas mix.
"This is due to more mature technology, reliable geological data and overlapping distribution with conventional gas, which can reduce infrastructure development costs. Substantial proven gas in Ordos basin will underpin long term gas growth," according to the consultancy that increased its tight gas outlook to 85 bcm by 2040.
-Domestic natural gas
According to the statement, in 2018, domestic gas production increased by 7%, mainly from conventional plays in the Ordos, Sichuan and Tarim basins.
"China is determined to reduce import dependence, urging for more upstream exploration and production activities," the report stated.
Meanwhile, the country's gas demand is expected to reach over 673 bcm, accounting for half of Asia’s gas consumption by 2040.
By Gulsen Cagatay