FACTBOX-China's fledging shale gas exploration

BEIJING, Aug 24 (Reuters) - China last week launched its first national shale gas research centre to support the country's development of the fuel. [ID:nTOE67M01O]

Encouraged by the boom in shale natural gas drilling in the United States and driven by recurring domestic gas shortages, China has fast-tracked plans to explore the unconventional fuel in its homeland.

TARGETS

Early 2010, a research arm of the Ministry of Land and Resources (MLR) set a target for the country to identify 50-80 shale gas prospects and 20-30 exploration and development blocks by 2020.

The Strategic Research Centre for Oil and Gas of MLR also set a goal to locate one trillion cubic metres of recoverable shale gas reserves, build 15-30 billion cubic metres of production capacity and produce 8-12 percent of China's natural gas from shale gas wells by 2020.

MLR's targets can be a reference to the industry, dominated by power energy giants PetroChina <0857.HK><601857.SS><PTR.N> and Sinopec Corp <0386.HK><600028.SS><SNP.N>, each of which has set their own goals to develop the frontier resource.

State-owned China National Petroleum Corporation (CNPC), which runs most gas and oil businesses via listed PetroChina, aims to produce 500 million cubic metres (mcm) of shale gas by 2015, a deputy general manager said in July.[ID:nTOE66300A]

Sinopec aims to have combined production capacity of 2.5 billion cubic metres of shale gas and coalbed methane gas by the end of 2015.

Major oil firms have just started evaluating potential shale gas deposits in parts of the country though some Chinese reports estimated that the country may hold up to 30 trillion cubic metres of shale gas resources.

POTENTIAL WHEREABOUTS

China's Sichuan basin, Erdos basin, Bohai Bay, Songliao basin, Jianghan basin, Tuha basin, Tarim basin and Junggar basin, mostly in the west and north, may hold shale gas.

The upstream regions of the Yangtze River valley, which include southern and eastern parts of Sichuan province, southeastern parts of Chongqing, northern parts of Guizhou and western parts of Hubei, are likely to contain sizeable deposits, according to preliminary estimates by the oil and gas research centre under the Ministry of Land and Resources.

TIMELINE

* August 2010, ConocoPhilips <COP.N> was reported to be in advanced talks with PetroChina over the development of a 3,000 square kilometres shale gas block between Chengdu, capital of southwestern Sichuan province, and Chongqing municipality.

* June 2010, Sinopec's southern exploration unit set up a shale gas exploration arm that eyes exploration breakthrough in 2-3 years and start industrial-level development of the gas in 3-5 years.

* May 2010, government officials said Beijing will likely offer subsidies and tax incentives to shale gas production, similar to that of coal seam gas whose production enjoys up to 0.33 yuan ($0.0485) per cubic metres of financial aid. But such policies have yet won final government approval.

* May 2010, Sinopec said shale fracturing at its Fangshen 1 well in Guizhou province was a success, the first such operation in China. The firm did not give further details.

* May 2010, China and the United States announced the two nations would cooperate in areas including shale gas, smart grid, clean coal, renewable energy, nuclear power and electric cars.

* January 2010, Sinopec was reported in talks with BP <BP.L> over potential cooperation in the exploration and development of a 2,000-square-kilometre shale gas block in Kaili in Guizhou province and a 1,000-square-kilometre block in Huangqiao in the northern part of Jiangsu province.

* November 2009, the Strategic Research Centre for Oil and Gas under the Ministry of Land and Resources drilled a test well in southwestern Chongqing and confirmed shale gas deposits.

* November 2009, PetroChina and Royal Dutch Shell <RDSa.L> reached an agreement to jointly evaluate shale gas reserves of the Fushun-Yongchuan block in Sichuan basin.

* October 2007, Houston-based Newfield Exploration Co <NFX.N> signed a deal with PetroChina to evaluate shale gas resources at the Weiyuan field in the Sichuan basin in southwestern China. ($1=6.799 Yuan)

(Reporting by Jim Bai and Aizhu Chen; Editing by Ken Wills)