China Set to Triple Unconventional Gas Supply Amid Price Rise

China will almost triple domestic output of unconventional gas by 2020 as upstream producers boost exploration after a nationwide price increase.

Supply is estimated to rise to 120 billion cubic meters a year by 2020, China Petroleum & National Corp. said in a newsletter posted on its website, citing Zhang Donghui, a researcher at the Chinese Academy of Social Sciences. China’s unconventional gas supply was 44.5 billion cubic meters in 2012, China National Petroleum Corp. said on its website in March.

Domestic gas suppliers in the world’s largest energy user may be encouraged to boost production of tight gas and shale gas after prices were lifted last week, Neil Beveridge, an analyst at Sanford C. Bernstein, said last week. The country raised city-gate prices for non-residential users by an average of 15 percent from July 10, the first increase in three years.

Output of tight gas, coal-bed methane and shale gas, China’s three main categories of unconventional gas, will rise to 80 billion cubic meters, 30 billion cubic meters and 10 billion cubic meters by 2020, respectively. Together they will account for 52 percent of domestic supply, according to Zhang’s research. Unconventional gas was previously projected to make up about a quarter of China’s supplies by 2030, CNPC said.

The nation’s tight gas output is estimated to reach 50 billion cubic meters by 2015 and will see a “production growth peak” between 2016 and 2020, according to Zhang. Total domestic gas supply will be 230 billion cubic meters by 2020 and 380 billion cubic meters by 2030.

To contact Bloomberg News staff for this story: Sarah Chen in Beijing at schen514@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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