Shell to Scale Back Sichuan Shale Gas Project

Royal Dutch Shell is thinking of scaling back its Sichuan shale gas project due to geological challenges and the area’s dense population, news agency Bloomberg reported Friday.

In 2012, Shell and PetroChina, a subsidiary of China National Petroleum Corp. (CNPC), signed China’s first contract for the exploration, development, and production of shale gas.

The contract covers shale gas resources in the Fushun-Yongchuan block in the Sichuan basin.

According to news agency, Shell now plans to focus chiefly on the development of the Changbei tight gas field in the Shaanxi region.

“In Sichuan progress has been slower and more difficult than we might have hoped: partly geological reasons, partly some of the challenges of operating in the very highly populated agricultural region,” Shell Chief Financial Officer Simon Henry told investors in New York. “It’s likely it will be smaller than originally envisaged.”

Shell executives will travel to China next week for talks with partners, Henry said. “It’s not looking like a major part of the investment program going forward,” Bloomberg quoted him as saying.