Water Scarcity Hindering China’s Shale Gas Production

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China holds the largest reserves of shale gas in the world, but much of it may never get developed because of one major obstacle: water scarcity.

new report from the World Resources Institute (WRI) says China suffers from high water stress, which may prevent it from ever fully developing its vast shale gas resources. China is sitting on 1.115 trillion cubic feet of technically recoverable shale gas resources, according to the U.S. Energy Information Administration, but much of it is located in arid areas of the country.

This presents an acute problem for a country that may see its natural gas consumption more than triple over the next 25 years.

China has not yet succeeded in producing its shale gas resources on a large scale, but the central government is putting a lot of effort into developing the expertise needed to economically extract natural gas. For several years now it has invested in North American shale gas companies, such as China National Offshore Oil Corp.’s (CNOOC) $2.1 billion investment in Chesapeake Energy back in 2010. A few months later, PetroChina spent $5.4 billion for a stake in Encana, a large shale gas producer in Canada.

Both moves were seen less as a financial investment and more as an effort to learn the secrets of the North American shale gas revolution.

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