China Designates Shale Gas for Development by Smaller Companies

China approved shale gas as an “independent mining” resource, adding it to a list of types of fields that smaller Chinese companies can develop.

The move, reported by Xinhua News Agency on Dec. 31 in a posting on the website of China’s Ministry of Land and Resources, extends access beyond China’s largest oil and natural-gas producers. China’s Ministry of Land and Resources plans a second round of shale-gas auctions in January, the ministry said last month.

Shale-gas exploration and production rights have been awarded to three companies including China Petrochemical Corp., also know as Sinopec Group, and China National Petroleum Corp., which drilled China’s first horizontal well this year working with Royal Dutch Shell.

China may hold 1,275 trillion cubic feet of shale gas, or 12 times China’s so-called conventional deposits, according to estimates by the U.S. Energy Information Agency. China hasn’t yet begun commercial shale production.