China's Shale Production Falls Short, but Goals Remain in Place

The head of China’s National Energy Administration, the country’s energy regulatory and planning agency, said that China has revised its 2020 forecasts for domestic shale gas production to 30 billion cubic meters per year, down from a previous target of 60 to 100 billion cubic meters. This revision acknowledges the complexity, and at times difficulty, involved in developing China's shale gas resources. Moreso, the downward revision simply makes expectations more realistic. Internally, China has been operating under the assumption that its initial estimates were wildly optimistic. 

China has moved to secure access to large volumes of natural gas from a number of different sources. Despite the downgrade in expectations, China has had encouraging results so far that have led Chinese oil and natural gas companies to revise upward their expectations over the next three years. Most important, the acknowledgement will not fundamentally alter China's efforts to limit coal consumption growth by allowing natural gas to offset growing energy demand, supplanting coal in key urban centers such as Beijing, which has banned all coal use from 2020.