Thu, Feb 28, 2019 - Page 10 News List

Shale backlash hits PRC after quakes

Bloomberg

The backlash against shale drilling in earthquake-prone regions — a thorn in the side of US energy companies for the past decade — reached China this week after a series of temblors killed two people and reduced homes to rubble.

China’s biggest oil and gas producer halted drilling in an area of the nation’s shale hub after three earthquakes in Sichuan Province on Sunday and Monday toppled nine houses and caused cracks in dams holding back five small reservoirs, according to the Zigong City Government Web site.

A further 12 people were injured and nearly 11,000 homes damaged, with losses pegged at about US$2 million.

The incident spurred residents to gather at a government building to ask if increased shale drilling in the area was to blame, state-run CCTV reported.

The local government’s Sina Weibo account said protesters numbered about 1,000, including some calling for a ban on shale exploration.

A unit of China National Petroleum Corp (CNPC, 中國石油天然氣集團) was forced to suspend operations, although Zigong said on its Web site that more research is necessary to determine whether the earthquakes were caused by shale activity.

The response echoes concerns in parts of the US, whose shale success Chinese drillers are trying to emulate as they attempt to boost domestic oil and gas production after becoming the world’s biggest importer of both fuels.

It also underscores how China’s citizenry is becoming more vocal in contesting any adverse environmental effects of industry.

“If local populations became wary of this it could mean greater local resistance to drilling programs in Sichuan,” Hong Kong-based Sanford C. Bernstein & Co analyst Neil Beveridge said. “That’s the greatest risk.”

Sichuan lies at the crossroads of some of the world’s most active fault lines and a 2008 earthquake there killed more than 80,000.

The province is also the center of China’s emerging shale industry.

CNPC deployed 125 rigs to the province last year to accelerate its development and the company has a multibillion-dollar plan to raise capacity to produce 42 billion cubic meters of gas from the region by 2035, to help meet government targets for higher energy output amid skyrocketing imports.

That would amount to about 15 percent of the nation’s gas consumption.

The firm has 15 platforms and 39 wells in the affected area of Rong County, according to the Zigong Web site.

CNPC’s Beijing-based spokesman was not available for comment.

Shares in the company’s listed unit, PetroChina Co (中國石油天然氣), yesterday fell as much as 1.9 percent in Hong Kong trading before closing 0.6 percent lower.

In US states such as Oklahoma and Texas, complaints of an increase in tremors have accompanied the dramatic rise of shale drilling, especially the underground disposal of water used in the fracking process.

Regulators in Texas in December last year said that they were considering new water-disposal restrictions because of earthquakes.

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