China’s Shale Gas Industry Attracts U.S. Firms.docVIP

China?s Shale Gas Industry Attracts U.S. Firms China, the world?s biggest en- ergy user, is set to copy the U.S. success in making shale gas a cheap and plentiful new fuel source. Though still in its early days with production nowhere near the commercial stage, China?s shale-gas industry holds lucrative opportunities for U.S. companies that provide oil-field services. They are looking to gain a foothold in China by investing in local partners before the country launches a second round of bidding later this year for its huge reserves of natural gas trapped within shale. Chinese stateowned companies were allocated shalegas blocks in the first round in June 2011. “There?s money to be made here,”said Simon Powell, head Asian-Pacific oil and gas analyst at broker CLSA. “It?s like the gold rush—it?s the guys who sold the picks and shovels who made the money, not the miners themselves,”according to a Wall Street Journal report. China to unlock its vast shale gas reserves For policy planners in Beijing, shale gas could be part of the answer to reducing China?s growing dependence on imported energy. A U.S. Energy Information Administration report in April said China had 1,275 trillion cubic feet (tcf) of technically recoverable shale gas resources—by far the largest in the world, followed by the United States with 862 tcf and Argentina with 774 tcf. The fields are mostly in Sichuan or in sparsely populated regions in the interior. The shale gas industry is still in its infancy in China, but the Chinese government has made shale gas a cornerstone of its five-year energy blueprint, aiming to boost production from no commercial output today to 60bn cubic metres yearly by 2020. The first round of bidding on government shale gas leases, which occurred last summer, was open only to state-owned companies, and the final bids awarded parcels to just two large firms. The second round, which could come later this year, will expand participation to privately owned co