Sinopec, CONOCO to cooperate in shale gas research

A subsidiary of China Petroleum and Chemical Corporation, or Sinopec Corp, has inked a deal with oil giant Conoco's China unit on research of a shale gas block in Sichuan Basin, a lowland region in southwestern China, for future exploration and production, according to a statement published on Sinopec's website.

The Qijiang block, located in the southeastern region of Sichuan province, was about 4,000 square kilometers. Exploration in the block faces difficulties including remarkable depth of the buried layer and geological complexity, the statement said.

Conoco will drill two wells in the section during their 24-month cooperation, according to the statement.

China has been seeking for shale gas since late 2009 but so far without large scale commercial operations. The government expects to boost production of the new clean energy from 2015, but before that it needs to obtain required technologies to explore the reserves, like the so-called fracking.

According to the U.S. Energy Information Administration, China has 1,275 trillion cubic feet, or 36 trillion cubic meters, of recoverable shale-gas resources in just two basins, exceeding the reserves in the U.S. and Canada combined.

In October, the Ministry of Land and Resources held a second shale-gas block auction aimed at fostering development of the sector among non-traditional Chinese energy companies.