Major Shale Oil deal for Chinese firm
Posted on January 5th, 2012 by Jeremy Barnett
Chinese firm Sinopec has agreed a $2.2 billion deal with Devon Energy, giving it access to USA shale oil deposits.
The BBC has today reported the signing of a major deal by Sinopec to develop US shale oil deposits. Sinopec will get a 1/3 share in 5 projects with an anticipated 125 new wells expecting to come online.
Under the deal, Sinopec will pay $900m in cash with the remainder of the payment being made by 2014. This joint venture will give China the necessary experience to develop it's own shale oil deposits, which are estimated to be in the region of 48 billion tonnes ( (20% of that thought to have been discovered by Israel at the valley of Elah, 20 kilometers from Jerusalem).
The oil shale industry was established in China already in 1920s. After decrease in the production, the industry started to increase and as of 2008; several companies are engage in the shale oil production or the oil shale-based power generation. After 2005, China became the largest shale oil producer in the world. At the end of 2006, the Fushun Shale Oil Plant was the largest oil shale plant in the world, consisting of seven retorting units with total of 140 Fushan type units ( above ground) producing 180,000 tonnes of shale oil per annum. In 2005, the China National Oil Shale Association was established in Fushan.
The advantages of the 'Fushan' type of process are small investment and stable operation. The disadvantages are a high use of water in the process and also great quantaties of waste shale. Despite recent fears in the West about the harmful effects of 'fracking', it seems that there is no such reluctance to use this process in China.
China has started to use fracking of natural gas, in it's drive to reach an ambitious target of 80 billion cubic meters by 2020, towards the target of fulfilling 10% of energy needs by natural gas and 15% from renewable sources. Last year, China's Ministry of Land and Resouces Strategic Resource Centre Head, Zang Dawei said ' The government places high emphasis on developing shale gas and has actively been studying supporting policies'.
Todays recent announcement follows the visit of President Obama to China in 2009 when he and President Hu Jintao announced a new US China Shale Resource Initiiative to promote 'environmentaly sustainable' development of natural shale gas resources. Very litte research has yet emerged to pacify those who believe that fracking is harmful and needs to be conducted in a highly regulated environment to prevent ecological damage.