First Shale Gas Output from China, India to Follow

I previously pointed out that, the Southeast Asian territorial dispute has NOT been about oil as popularly thought.

And since China has the largest reserves of Shale energy in the world, like the US, dependence on external sourcing of oil WILL diminish. So there hardly is any need or incentive for gunboat diplomacy (except to use this as diversion for other unstated reasons).

Also I pointed out that Shale gas revolution is the future of energy which should translate to a worldwide phenomenon.

I would guess that the shale gas revolution will be a worldwide phenomenon which should wean away our dependence on oil. The net effect outside manipulation of money by governments should be to materially bring down or lower prices of energy.

Now some confirmations to this prediction: China will be having its first shale gas output while India is slated to access local Shale energy too.

The roll out of Asia’s shale gas boom has began!

From Bloomberg (bold emphasis mine)

ONGC, India’s biggest explorer, is studying data for shale- gas deposits and awaiting a government policy on commercial drilling for gas trapped in shale rock, Sudhir Vasudeva, chairman of the state-run company, said in a telephone interview yesterday. China Petrochemical Corp. will start pumping the nation’s first shale gas from a project in Sichuan province next month, according to a report on Caixin’s website on May 15, citing the company…

India holds 6.1 trillion cubic feet of technically recoverable shale gas reserves in three basins, the U.S. Geological Survey estimated in a report in January. That was less than 10 percent of the 63 trillion cubic feet estimate made the previous year, in April, by the U.S. Energy Information Administration in a report.

“The U.S. estimates are just estimates, and we’ll have to survey the geology and deposits and drill wells before we know how much shale gas we have,” Vasudeva said. “What we do know is that India does have shale-gas reserves.”

ONGC found shale gas at a well in India’s West Bengal state, according to a Jan. 27, 2011, statement. The company signed an agreement with ConocoPhillips (COP) on March 30 for developing shale resources in India and North America.

India Auction

India has started mapping its shale resources and will have exploration rules in place by 2013, Prime Minister Manmohan Singh said March 23. Blocks will be auctioned next year after the policy is published, G.C. Chaturvedi, the top bureaucrat in the oil ministry, said Dec. 21…

China has 25.08 trillion cubic meters (886 trillion cubic feet) of exploitable onshore shale-gas reserves, the country’s land ministry said March 1. The world’s biggest energy consumer aims to produce 6.5 billion cubic meters of shale gas by 2015 and set a target of 60 billion to 100 billion cubic meters by 2020, the National Development and Reform Commission said.

China Shale

China drilled 50 shale-gas wells in the past year, compared with 1,300 a month in the U.S., Chris Faulkner, chief executive officer of Breitling Oil and Gas Corp., said April 23. It takes “three to five years” for a shale-gas discovery to start commercial production and an extensive pipeline network is needed to transport the fuel to consumers.

My comments

This should serve as more proof that shale gas is the future of energy.

This also means that the emphasis for acquiring energy reserves will largely be directed to Shale at the expense of alternatives (conventional oil, coal, nuclear, solar, wind)

And this is why energy geopolitics will shift to Shale.

My favorite environmental science and economics author Matt Ridley writes

The campaign to stop shale gas proving its case in the market is political, not scientific. Behind it lies vested interests. The Russian gas industry, which is alarmed at losing its impending near-monopoly on European gas supplies, has been vocal in its criticism of shale gas. The coal and nuclear industries too would like to see this baby strangled at birth, but have been less high-profile.

Most of the opposition, though, has come from those with a vested interest in renewable energy, including the big environmental pressure groups, which are alarmed that the rich subsidies paid to wind, biomass and solar may be under threat if gas gets too cheap and cuts carbon emissions too effectively. Their entire rationale for subsidy, parroted by their dutiful poodle Chris Huhne, when Energy Secretary, is that gas would get more expensive until even wind and solar looked cheap. That was wishful thinking.

Even if you do not think carbon emissions are the highest environmental priority, there is a more fundamental reason why using gas is good for the planet. No other species needs or uses it. Every time you grow a biofuel crop, harvest timber for a biomass power station, pave a desert with solar panels or dam a river for a hydro plant, you are stealing energy from the natural world. Even the wind is needed - by eagles for soaring, by bats for feeding (both are regularly killed by wind turbines). As the only species that uses gas, the more we use it the more we can leave other sources of energy for nature.

And lastly, given all of the above, this is further evidence that many have seduced to the quackery, peddled by politicians and mainstream media, that the Southeast Asian territorial disputes of Scarborough or Spratlys has been about oil.

As a side note, Japan and China has their version of territorial dispute through Senkaku Islands which I earlier pointed out. Yet, in spite of the supposed bickering, Japan-China-South Korea concluded last week what has been labeled as the "Trilateral Summit" covering vast economic and political issues

Part of the rapprochement reached from the conference as noted by Xinhua, ironically China’s official press agency:

On strengthening communication and coordination in regional and international affairs, they stressed the mutually reinforcing and complementary roles of the trilateral cooperation and such regional fora as ASEAN Plus One, ASEAN Plus Three, East Asia Summit, ASEAN Regional Forum and Asia-Pacific Economic Cooperation, said the declaration.

They reaffirmed that the ASEAN Plus Working Groups need to be established without delay to accelerate the discussion on a regional comprehensive economic partnership towards the commencement of negotiations, taking into account the initiatives of East Asia Free Trade Area (EAFTA) and Comprehensive Economic Partnership for East Asia (CEPEA).

So again, the Philippines either has a Dr. Jekyl and Mr. Hyde relationship with China or that all the ruckus about the gunboat diplomacy has been geopolitical vaudeville.