Water Scarcity Hindering China’s Shale Gas Production

China holds the largest reserves of shale gas in the world, but much of it may never get developed because of one major obstacle: water scarcity.

New report from the World Resources Institute (WRI) says China suffers from high water stress, which may prevent it from ever fully developing its vast shale gas resources. China is sitting on 1,115 trillion cubic feet of technically recoverable shale gas resources, according to the U.S. Energy Information Administration, but much of it is located in arid areas of the country.

China has not yet succeeded in producing its shale gas resources on a large scale, but the central government is putting a lot of effort into developing the expertise needed to economically extract natural gas. For several years now it has invested in North American shale gas companies, such as China National Offshore Oil Corporation’s (CNOOC) $2.1 billion investment in Chesapeake Energy back in 2010. A few months later, PetroChina spent $5.4 billion for a stake in Encana, a large shale gas producer in Canada.

In China, over 60 percent of its shale gas reserves are located in areas suffering from “high to extremely high”water stress. That could cause tension with communities or other businesses that are also in need of water.

Mexico has 545 trillion cubic feet of shale gas, a little less than the 665 tcf found in the United States. But most of Mexico’s shale gas is located in the deserts in the northern part of the country, just south of the Eagle Ford shale in Texas. For anyone who has visited northern Mexico, they know that water is scarce. Just 4 percent of annual rainfall in Mexico hits the north. The Burgos basin, Mexico’s most promising, is in an “extremely stressed”water area, with much of its aquifer depleted.

South Africa faces similar constraints. It has one large shale play, over 75 percent of which is located in a region suffering from “extreme”water stress. As is true in most places, the vast majority of water is used for agricultural purposes, so the development of shale gas in South Africa would likely mean diverting water from other uses.

（oilprice.com Edited by Topco)