So the timeline has now slipped to Sep , 2014 .....
Sure rush it then this happens:
China back to drawing board as shale gas fails to flow | Reuters
* New entrants fail to make progress in shale gas
* Beijing may go back to reliance on state energy giants
* Shale gas development likely to be long, slow haul
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By Chen Aizhu
BEIJING, Sept 6 (Reuters) - China has gone back to the drawing board on how to develop what could be the world's largest shale gas reserves after attempts to stimulate investment and engineer an energy revolution brought little progress in the gas fields.
Beijing has struggled to find a way to emulate the frenetic exploration and production activity of the shale gas boom in the United States, and the latest setback makes reaching even a modest 2015 output target of 6.5 billion cubic metres (bcm) unlikely.
This is only a fraction of the 224 bcm of shale gas the United States produced in 2011, and would amount to just 6 percent of China's total current output of natural gas.
But even that target is under threat as an eclectic mix of new participants in the sector drag their heels on development, while China's biggest energy companies prioritise spending on other oil and gas projects.
Frustrated with slow progress on shale from state energy giants PetroChina and Sinopec Corp, China in late 2012 encouraged a broad range of companies - including a property developer and a grains trader - to bid in its second shale gas auction.
Not one of the 16 firms that won exploration rights had ever drilled a gas well. But they did promise to spend at least $2 billion over three years to pump gas from shale.
Beijing hoped this might give the sector a jolt. But eight months later, the Ministry of Land and Resources (MLR) said the firms have barely started seismic work and one of them sold a stake in a block before doing anything.
The cost of drilling and the complexity of tapping China's shale reserves have proven a daunting prospect for the shale gas novices.
"The sector liberalisation looks unlikely to work in shale gas, as its investment is too high and returns are too low," said Chen Weidong, a senior industry analyst.
BACK TO THE FUTURE
The lack of progress may lead Beijing to reverse the rare move to open part of the upstream energy sector to broader competition, government and industry officials said.
The world's largest energy consumer may have no choice but to turn back to its more experienced energy companies to develop shale gas, even if that means returning to the same slow pace of progress that had frustrated China's bureaucrats.
"The criteria may return to whether the company has the relevant technology and experience in drilling for oil and gas," said a government official with knowledge of the ministry's thinking.
How the ministry runs its third auction for shale gas acreage is now being considered.
Slow development of China's enormous shale gas potential and missed output targets may be bad news as the country tries to develop domestic gas supplies to ease its heavy dependence on dirtier coal and expensive imports of oil and gas.
The U.S. Energy Information Administration estimates China is sitting on 1,115 trillion cubic feet of shale gas, nearly double the size of the reserves in the United States.
BIG SPEND, SMALL RETURN
The problem for Beijing is that PetroChina and Sinopec are reluctant to devote resources to shale gas after experiencing hefty exploration costs for low output in pilot drilling.
China has to date spent around 10 billion yuan ($1.6 billion) to drill around 130 shale gas wells. PetroChina and Sinopec, which hold the rights to the most prospective shale acreage in China, have drilled most of them.
Only a handful of those wells are producing over 40,000 cubic metres of gas a day, deemed a break-even level for the $13 million to $16 million each well costs, officials said.
To achieve an official target of 6.5 bcm of shale gas output by 2015, China would need to spend 126 billion yuan ($20 billion) on a total of 1,800 wells, provided each produces 10,000 cubic metres per day, according to industry estimates.
Neither PetroChina nor Sinopec have plans to drill close to that number.
PetroChina, Asia's biggest oil-and-gas producer, had planned to drill close to 400 wells over the next few years in the Changning area of southwest Sichuan province, a government-designated shale gas pilot zone, but is only expected to complete the first 20 by end of this year.
It wants to see production results from those wells before embarking upon a wider drilling programme.
PetroChina, which pumps over 70 percent of China's domestic gas output, has successfully tapped another unconventional gas - tight gas. The company is boosting output rapidly from tight gas so has little incentive to push into shale. It also still has less complex conventional reserves to tap.
The firm is tightening spending and is likely to record its first annual drop in capital spending in 2013 since its Hong Kong and New York stock market listings in 2000.
"The big firms are more cool-headed and their plates are full with conventional and tight gas," said Sun Xiaogang, an executive with service company SPT Energy Group.
That is probably why PetroChina repeated this month its modest target to pump 1.5 bcm of shale gas by 2015, less than a quarter of the national target.
One of the challenges Chinese firms have struggled to overcome is how to adapt shale technology developed in the U.S. to China's geology. Chinese shale formations tend to be deeper than those that have provided the energy that has ended U.S. dependence on imported gas and slashed reliance on imported oil.
"A realistic way to look at China's shale gas is that it is a very rich resource, but one that needs a long process to unlock," said the government official. China took nearly 20 years to embark on full-fledged development of its conventional gas fields, he said, and shale may be similar.
"What the industry needs to focus on is to perfect expertise in conventional and tight gas and then transplant it to shale gas."
