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Obstacles to China’s shale

Several factors stand in the way of shale development in China.


Most of China’s shale deposits lie in the earthquake-prone and mountainous southwest or the remote arid deserts of the far west. The gas deposits are also deeper — often 4 kilometers, or 13,000 feet, below the surface, compared with 2 to 4 kilometers in the United States.

Water shortage

Another constraint is a lack of the necessary water required for hydraulic fracturing, which has been crucial to commercializing US shale gas. In 2011, China had a renewable water resource per capita estimated at only a quarter of the world average at 2,063 square meters a year. Except for the Sichuan basin, all of China’s major shale-gas basins are located in the arid north. Even in Sichuan, water resources are 3,040 square meters per capita a year, significantly lower than the US figure of 17,000 square meters, and 80 percent of Sichuan’s water is used in agriculture (Fansom 2014; Fan Gao 2012).

Structure of the energy industry

The dominance of China’s national oil companies and national service companies (NSCs) has constrained such competition and entrepreneurship, resulting in less innovation and cost-competitiveness compared to independent service companies

Lack of private ownership of land and mineral rights

The US shale gas revolution mainly took place on privately-owned land. A lack of private ownership of land and mineral rights in China is a major bottleneck for shale development. Private ownership makes it easier for land transfer or leasing.

Pipeline infrastructure

Pipeline infrastructure is another major obstacle to shale development. While the US pipeline system stretches over nearly 500,000 kilometers for 722 bcm of consumption in 2012, China’s pipeline network is below 45,000 kilometers for projected consumption of 250 bcm in 2015.


  • Anthony Fansom, “China: the next shale gas super power?” The National Interest, October 9, 2014.
  • Fan Gao, “Will there be a shale gas revolution in China by 2020?” Oxford Institute for Energy Studies, Working Paper, April 2012.

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This article is from the free online course:

Global Resource Politics: the Past, Present and Future of Oil, Gas and Shale

Hanyang University