China falls behind U.S. in its shale gas development

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When the Chinese put their collective muscle behind a problem, they seem to usually come up with a solution. The growth of China’s economy, especially the rise of its cities, has been astounding. But China has run up against one riddle it’s been unable to solve: the production of shale gas.

Despite having the world’s largest shale-gas reserves, estimated to be twice those of the U.S. – and an urgent need to reduce air pollution from its unhealthy dependence on coal – China’s shale-gas production is stuck in neutral. In fact, despite heavy investment, its shale production has been so underwhelming that Beijing just cut its ambitious 2020 gas production goal in half.

China’s failure to jumpstart its own shale revolution speaks to the challenges of Chinese geology, the learning curve involved in cracking the shale code and, most importantly, the scale of the achievement we are witnessing in the United States.

Take Ohio’s Utica shale formation. Natural gas production from the Utica shale has grown tenfold since January 2012. More than 1,000 horizontal shale wells have been drilled, and the U.S. Energy Information Administration (EIA) refers to Ohio and the Utica-Point Pleasant formation as one of the fastest growing natural gas producing areas in the country.

EIA also reports that the productivity of each new Utica well is increasing. In January 2012, the average Utica well was producing .3 million cubic feet of gas per day. Today’s new well productivity has grown more than 15 times to five million cubic feet per day and is continuing to rise. That jump in productivity outpaced the growth rate seen in the first two years of production in Louisiana’s prolific Haynesville shale and the world-renowned Marcellus shale.

While China and other nations struggle to get shale production under way, gains in well efficiency from the Utica shale show that the American shale revolution is not only here to stay but its pace is picking up. The result has been a remarkable shift from natural gas scarcity to one of abundance.

A little more than a half decade ago energy experts were predicting that U.S. natural gas production couldn’t keep up with demand. We were destined to rival Japan as the world’s largest importer of liquefied natural gas (LNG).

Now, thanks to the shale revolution, gas production is outpacing demand and the U.S. Geological Survey estimates that U.S. gas reserves could last more than a century. Our abundant gas supply is driving a manufacturing renaissance and we are now poised to become a major LNG exporter. More than two dozen companies have applied to the Department of Energy to build export terminals. Those earlier fears of becoming dependent on foreign natural gas have all but vanished.

The economic benefits from shale production have meant new investment and jobs in many Ohio communities that had not seen much of either in quite some time. In Carroll County, Ohio, a hotspot of energy development, the unemployment rate has fallen from 12.7 percent in November 2010 to 7.1 percent in March of this year.

In some U.S. political circles it has become fashionable to question whether our days as the world’s only superpower are coming to a close. If the shale revolution is any measure, American innovation and knowhow remain unmatched. The Chinese petroleum engineers struggling to tap their country’s shale resources certainly know it.

Robert W. Chase is chair and benedum professor of Marietta College’s Department of Petroleum Engineering & Geology, 215 Fifth St., Marietta.