China Expands Incentives to Boost Natural Gas Production Amid Growing Imports: EIA

The Chinese government introduced a subsidy program establishing new incentives for domestic production of natural gas from tight formations and extending existing subsidies for extraction from shale and coalbed methane resources, according to an Oct. 23 report from the U.S. Energy Information administration.

The program, introduced in June, is scheduled to be in effect through 2023. In addition to the incentives, China’s government allowed foreign companies to operate independently in the country’s oil and natural gas upstream sector.

Natural gas imports, both by pipeline and in the form of liquefied natural gas, accounted for about 45 percent of China’s natural gas supply in 2018, up from 15 percent in 2010. Last September, the country set a target of 19.4 billion cubic feet per day for domestic gas production in 2020, compared to the average production of 15.0 Bcf/d in 2018.

Production of tight gas, shale gas, and coalbed methane collectively accounted for 41 percent of China’s total production in 2018. Tight gas production was negligible until 2010, when companies launched a drilling program that helped lower the drilling cost per vertical well and improve productivity.