Shell, PetroChina Developing Shale Oil Field at Much Cheaper Cost

Royal Dutch Shell Plc and PetroChina Co. announced they are producing natural gas from China's Changbei field at a much cheaper rate than PetroChina's other projects.

The production costs 91 percent less than PetroChina's 2012 average lifting cost, Bloomberg reported. The cost of output from the field is $1 per barrel of oil equivalent, Xu Li, Shell's general manager of the asset, announced Nov. 19. In 2012, PetroChina's lifting cost was $11.74 per barrel of oil.

Royal Dutch Shell and PetroChina expect to increase operations in the field as China aims to reduce its reliance on coal-fired power and turn to cleaner energy sources like natural gas, iNVEZZ reported. Shell has invested $1 billion in China during 2013.

"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.

Chinais expected to have an even larger amount of unconventional shale gas resources than originally thought, according to the International Energy Agency.

(pennenergy.com, edited by Topco)