China Shenhua Energy to Pump $90 mn in US Shale Business

China Shenhua Energy will invest $90 million to set up a company in the US which will cooperate with Energy Corporation of America (ECA) in developing shale gas, Global Times reports citing stock exchange filing by the company. 

The new company will be a subsidiary of Shenhua Overseas Development & Investment Co Ltd (Shenhua Overseas), which is a wholly owned subsidiary of Shenhua, according to the filing.

According to Global Times, the shale gas project, which has 25 gas wells, is located in Pennsylvania and is expected to produce 3.8 billion cubic meters gas in the first 30 years. 

The total investment will be around $146 million, including the $90 million investment from Shenhua and the rest shared by Shenhua Overseas and ECA, the filing states. 

Given the short history of shale gas production, Shenhua claimed the project contains high risks, therefore, Shenhua Overseas has taken some necessary actions to control this risk. 

Quoting from a research report of GF Securities, Global Times reports that Shenhua's objective is to learn about exploiting technology and business models of shale gas through the project, preparing for shale gas development in China. 

In China, Shenhua has already won bid to develop shale gas project in Hunan Province. The company also plans to develop shale gas business in Southwest China's Guizhou Province, the research report says. 

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