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CNPC Reportedly Plans to Double Shale Gas Production in 2018

China National Petroleum Corp. (CNPC), the largest state-owned producer of oil and natural gas in the country, reportedly plans to nearly double natural gas production from shale sources this year and wants a five-fold increase in such production by 2020.

CNPC said it plans to produce 5.6 billion cubic meters (bcm) (197.8 Bcf) of natural gas from unconventional sources in southwestern Sichuan province in 2018, according to a report Tuesday by Caixin Media Co. Ltd., a Beijing-based news service. The company reportedly plans to drill more than 330 new wells targeting the Sichuan Basin in 2018, and wants to have more than 820 shale gas wells in operation by 2020, with total annual production of 15 bcm (529.7 Bcf).

According to CNPC's latest annual report, the company produced 3.15 Tcf of natural gas from domestic sources in 2017, up 4.8% from 2016 (3.0 Tcf), and mostly from conventional drilling. Caixin reported that CNPC's natural gas production from shale was about 3 bcm (105.9 Bcf) in 2017.

Other domestic unconventional formations mentioned in the CNPC report include the Bohai Bay, Erdos, Songliao and Tarim basins.

Last April, analysts with Wood Mackenzie estimated that China's unconventional natural gas production would reach 17 bcm (600.3 Bcf) by 2020.

Despite rising fears of an international trade war, and a possible disruption to Sino-American cooperation in the energy sector, CNPC has a large presence at this year's World Gas Conference, which is being held this week in Washington, DC.

Tensions remain high after the Trump administration levied a 25% tariff on $50 billion worth of Chinese goods, including parts used for offshore oil and gas drilling, earlier this month. Beijing swiftly retaliated by announcing a similar package of tariffs on American-made goods.

The trade spat may have also impacted multi-billion dollar plans for shale gas-related projects in West Virginia, as well as a five-party joint agreement to help develop the Alaska LNG project. Both projects were announced last November.

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