(upstreamonline) -- ConocoPhillips has joined up with Sinopec to explore for shale gas in China as the country grapples with the best way to exploit its potentially significant unconventional resources, the US player said.
This marks the official entrance of a third major international oil company into China's shale gas industry. Shell signed a similar agreement in 2009 with PetroChina before it green-lighted a more formal production sharing contract in March.
Chevron signed a joint study agreement with Sinopec in April 2011 and began initial drilling in the first quarter.
Other international oil majors such as BP and Total have said they are studying similar agreements, but have yet to announce any partnerships.
The Chinese government has targeted raising annual shale-gas output from practically nothing now to 6.5 billion cubic meters by 2015 and as much as 100 billion cubic meters by 2020.
Under Sinopec's latest shale-gas agreement, ConocoPhillips will drill two wells in a 3,917.53-square-kilometer section of the Qijiang block in China's southwestern Sichuan province, Sinopec said. It didn't disclose financial details.
Chevron plans to drill three more wells in shale formations in China, but doesn't expect rapid progress there, Chevron Gas and Midstream President Joseph Geagea said earlier this month, citing a shortage of geological data and insufficient infrastructure.
Although Shell has said the results of its joint study agreement have been encouraging, the Chinese government hasn't yet announced approval of its production-sharing contract with PetroChina.
China's progress in developing shale-gas reserves has been slow to date, even though its energy majors have bought into shale-gas assets in North America to gain know-how in the projects and technologies that have spurred a gas boom in the US. As MRC wrote earlier, Dow Chemical, Formosa Plastics, and Chevron Phillips Chemical have vast expansion plans in North America.
MRC