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A fuel to slow climate change lies 3,000 meters below a new wellhead in China’s Sichuan Province. There, shale gas production has begun, and it just might help wean China off the coal that has made it the world's worst carbon dioxide polluter—and blanketed the nation in bad air.
Getting that world-changing gas requires pumping millions of liters of specially treated water down a deep well to fracture subterranean shale. It also requires the know-how to thread a well through a layer perhaps just a few tens of meters thick at the bottom. And it requires the infrastructural support—and legal framework—to get that gas to market and reward those who produce it.
"The vision is that Chinese shale gas has geostrategic benefits, it has environmental benefits and it has economic benefits," says David Sandalow, the inaugural fellow at Columbia University's new Center on Global Energy Policy who until last year was assistant secretary for policy and international affairs at the U.S. Department of Energy (DoE). "The U.S. government has seen shale gas in China as in our common strategic interest." As a result, the U.S. has partnered with the communist country to help develop the new resource, including the U.S.–China Shale Gas Initiative unveiled during Pres. Barack Obama's trip to Beijing in 2009.
From Anhui to Xinjiang Chinese companies have begun to drill into the earth for shale gas. One well in Sichuan has already produced more than two million cubic meters of shale gas that, when burned as fuel, produces roughly half the CO2 emissions of burning coal—as well as less soot, smog and other human health threats from air pollution.
Big play
China has a vast resource of natural gas trapped in shale—Beijing calculates that hydraulic fracturing and horizontal drilling could recover 25 trillion cubic meters of shale gas from eight basins. The DoE has a bigger estimate: some 36 trillion cubic meters. That dwarfs the DoE's evaluation for the natural gas from shale in the U.S.—just over 24 trillion cubic meters—which has transformed the use of fossil fuels in this country. By any estimate, China appears to have the largest reserves of shale gas in the world.
The rewards are equally huge: improved energy security for the world's most populous nation as well as reductions in air pollution, whether the smog from burning coal that blankets Chinese cities or concentrations of carbon dioxide are emitted into the global atmosphere.
Yet, it remains unclear exactly how shale gas might work in China, including how long wells might last and how easy they are to tap. That's because the geology itself is more challenging there than in the U.S. "It's deeper and has a clay composition that is not as favorable," Sandalow notes. Simply put, the shale basins where the gas is trapped are at least 3,000 meters down and often more. And the resource often lies in a geologic terrain twisted and folded by faults, making accessing the natural gas even more challenging.
Chinese companies have only drilled a few hundred wells—roughly half have successfully tapped gas—compared with thousands in the U.S. (with a much better success rate). Such wells in China are also expensive, costing at least $10 million (60 million yuan) to drill. In a bid to develop expertise and cut the expense Chinese state-owned oil companies, such as Sinopec and China National Offshore Oil Corp., have begun to invest in U.S. shale gas development. And the central government has set targets in its current five-year plan of 6.5 billion cubic meters of shale gas to be produced annually by 2015, jumping to at least 60 billion cubic meters per year by 2020. That would equal nearly one third of expected U.S. shale gas production and would require thousands of wells to be drilled in the next few years.
The Chinese are also attempting to mimic the U.S. in allowing companies other than the state-owned oil giants to begin exploring for shale gas, legally designating the resource as one that can be independently mined. And the price of shale gas (and the methane found in coal deposits) has also been left freer of regulation than other energy prices, a bid to let the market decide cost and reward producers.
Water stress
The key hurdle to China's development of fracking may prove to be water. Fracking a single well in the Marcellus shale of the northeastern U.S. requires at least 7.5 million liters of water, which is then contaminated and must be disposed of as wastewater. China does not have a similar abundance of water to waste and would likely recycle the water for further fracking, adding expense. Nor does the country have environmental regulations to protect groundwater from frack water, which has proved controversial here in the U.S.
China also lacks the kind of pipeline infrastructure to get gas from wells to users that the U.S. employs. "Building a pipeline network in China comparable to the U.S. would be a $500-billion investment," Sandalow says, although the Chinese have an excellent track record of building large and expensive infrastructure projects quickly, such as a national high-speed rail network that was completed in five years. "I don't know if that would be such a showstopper."
The biggest risk may be geologic. Areas like Sichuan are already prone to earthquakes—the Wenchuan quake in 2008 killed at least 70,000 people and may have been exacerbated by the reservoirs for new dams in the region. Fracking with high-pressure water, or the disposal of wastewater down wells, could increase that risk as well.
Central plans
Nevertheless, China has big plans for natural gas as a fuel, whether or not it comes from fracking. The country has set up industrial plants to transform coal into a synthetic gas fuel, which when burned in place of coal will help cut down on life-shortening air pollution. But this gas would do nothing to alleviate climate change, because the gasification process results in even more greenhouse gas pollution than if the coal was burned directly in a power plant.
Combating the climate change caused by CO2 might prove the biggest role shale gas could play in China. If burning natural gas could displace even some of the burning coal that currently makes China the world's largest greenhouse gas polluter, climate change itself would be slowed. In the U.S., thanks to cheap shale gas, among other factors, total greenhouse gas emissions dropped by roughly 10 percent between 2009 and 2012.
In China, coal provides nearly 70 percent of all the energy the nation uses as the workshop of the world and a developing country. As a result, China pumped out nearly 10 billion metric tons of CO2 in 2013. If natural gas replaced coal, that climate changing pollution could be cut in half.
Prospects for shale gas—or natural gas from central Asia and Russia—suggest that China will move away from coal sooner rather than later, at least according to some analysts. In research published in September 2013 Citibank predicted coal use in China will peak before the end of this decade, thanks to natural gas and other coal-minimizing changes such as increasing deployment of renewable and nuclear power. Already, in 2013 alone, China produced some 200 million cubic meters of natural gas from shale, according to the central government—nearly seven times more than the amount produced in 2012.
China would need to increase that shale gas production via fracking more than 30 times in just the next two years in order to meet its goal. "Most observers are skeptical about the ability to hit the government targets," Sandalow says. And, even if those targets are met, greenhouse gas pollution may remain: Rising prices for natural gas in the U.S. meant an uptick in coal burning in 2013—and an attendant 2 percent rise in CO2 from electricity production.
"Natural gas is a fossil fuel. If it's not done correctly, the methane emissions are profound," Obama told The New Yorker in an interview. "But, if we can get that right, then for us to see natural gas supplant coal around the world the same way it's happening here in the United States, that's a net plus." The Chinese dream without fracking could prove too polluting for the shared atmosphere.