Is Mainland China Catching “Shale Gas Fever?”

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The US is off and running with its huge shale oil & gas resources. An energy renaissance for the US may be in the making for both hydrocarbons and nuclear power, if the US government only allows it to happen.

US shale-gas reserves are 862 trillion cubic feet, the government’s Energy Information Administration estimates. “Shale gas fever” has gripped several states, producing jobs and boosting local economies.

“The economic consequences from this supply and demand revolution are potentially extraordinary,” oil analysts from Citigroup Inc concluded in a March 2012 report that dubbed North America “the new Middle East”.

China has even larger shale gas resources than the US, but China is more corrupt, and much newer to the technology of the shale gas game.

China presents competitive advantages in production of gas from shale and other unconventional sources, namely low costs for drilling and domestic gas prices that have tended to exceed those in ultra-low North America, experts say.

In November, China’s Finance Ministry said the government would pay 0.4 yuan (6 US cents) to shale developers for every cubic meter of gas produced between 2012 and 2015.

China is just getting started, and faces a large number of governmental and technological challenges. But if China can get its act together — and tame its destructive tendencies toward graft and corruption — Russia’s larcenous gas export industry may be in very big trouble.

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