Oil Major Boasts of Cheap Extraction Costs at Changbei Gas Field

Royal Dutch Shell (LON:RDSA, LON:RDSB) and PetroChina (HKG:0857) are producing natural gas from the Changbei field in China at $1 per barrel of oil equivalent – much lower than similar projects, Xu Li, Shell’s general manager of the asset told the media yesterday. The cost is about 91 percent lower than PetroChina’s lifting cost of $11.74 per barrel of oil in 2012.

Shell is investing $1 billion (₤620 million) in China this year as it looks to capitalise on the country’s ‘unconventional’ (read, shale) natural gas sector. The world’s second biggest economy and largest energy consumer is aiming to lower its reliance on coal and increase the use of cleaner substitutes, such as gas.

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“We have started to drill more test wells in the second phase of development in the Changbei project, and we expect the second phase to bring a significant amount of output,” Xu said. All output from Changbei is being sold to Beijing.

According to researchers at the International Energy Agency (IEA), China’s shale gas resources might prove larger than those found in the US. However, most prospects in the country are still in the exploratory phase.

 (invezz.com, edited by Topco)