China's shale gas production could hit 65 billion cubic metres by 2035, about six times the volume produced in 2018, according to a senior industry official of a subsidiary of China National Petroleum Corporation (CNPC), writes Xu Yihe.

Zhao Wenzhi, president of CNPC-owned Petroleum Exploration & Development Research Institute, said that the country’s domestic gas production will peak at 280 Bcm by 2035, up from 162 Bcm reported last year, with shale gas expected to account for 25% of this volume.

Addressing a recent gas conference in China, he said that meeting this expectation will require the drilling of 500 shale gas production wells per annum through to 2035, twice the number of shale gas wells drilled in 2018.

Zhao added that more wells are needed to make up for natural decline rates, remarking that shale gas wells will normally witness production depletion rates of 60% per year.

By the end of 2018, China had in total drilled 898 shale gas wells and had confirmed producible reserves of 1.05 trillion cubic metres, he said.

The latest survey shows the country now boasts 21.8 Tcm of technically recoverable shale gas resources, which could help underpin a production capacity of 50 Bcm per annum.

PetroChina is taking advantage of government subsidies for unconventional gas development and aims to boost its unconventional production to 46.8 Bcm by 2020, up from an expected 41 Bcm this year, which is about 37% of the company’ s total gas throughput.

The company's vice president Ling Xiao said that of the total unconventional gas output next year, 77% will be tight gas, 18% will be shale gas and the rest coalbed methane.

In June this year, China's government decided to provide subsidies for tight gas production in response to industry demand for financial support.

Instead of offering an absolute sum per cubic metre of tight gas produced, the ministry decided that a subsidy will apply to each cubic metre of tight gas produced over the amount a company registered in 2017.

These new rules also apply to shale gas and CBM production.

The government now subsidises CBM production to the tune of 0.3 yuan ($0.04) per cubic metre and shale gas at 0.2 yuan per cubic metre.

Ling said his company was entitled to 1.5 billion yuan of the unconventional subsidies last year and expects 2019 subsidies will total 4 billion yuan.