The International Energy Agency (IEA) estimates that China possesses shale gas reserves of up to 50 trillion cubic meters, more than double the proven reserves lying beneath the United States. What quantity of Chinese shale gas is recoverable remains unclear.
The US is now producing an estimated 23 percent of its fossil fuel energy from shale gas and sits on the second largest reserves in the world. In efforts to emulate US production, energy-hungry China is rapidly buying technology from and cooperating with overseas energy firms. The Chinese State Council has made exploitation of this newfound domestic resource a priority.
China's petrochemical industries are currently drilling exploratory wells in several parts of the country and have set up joint ventures with international companies in exchange for technology. Wells have already begun production in Yunnan's Zhaotong Prefecture, as well as in Sichuan Province near both Chongqing and Chengdu.
Although larger reserves of shale gas have been identified in both northeast and far western China, southwestern blocks are more attractive to developers because water resources are more plentiful.
Shale gas is extracted from the ground through a process called hydraulic fracturing, or fracking. Energy companies in the US — especially Halliburton — have developed a system where huge amounts of water and fracking fluids are pumped deep into the ground.
Wells are often several miles deep and used to create or increase faults in rock formations. The new cracks release previously nonexploitable pockets of natural gas that then rise to the surface for collection.
Because modern fracking is a relatively new form of drilling it is currently unregulated in China. The Ministry of Environmental Protection has said writing laws specific to shale gas extraction could take three to five years. Environmental activists argue this is too long.
Critics of the process argue that fracking irreversibly contaminates groundwater and eventually seeps out of the ground. In addition to the water necessary for hydraulic fracturing, dozens of carcinogenic and non-biodegradable chemicals are injected into wells. It is estimated that 30 percent of the chemicals remain in the ground after drilling is completed.
Another major concern for fracking opponents is that the process causes micro-earthquakes. Much of the fracking in the US is done in areas where earthquakes are relatively rare, such as in Texas and New England. This is not the case in Zhaotong, which was hit by two 5.7 magnitude earthquakes in September. Sichuan is also no stranger to violent tremors as the province straddles the Longmenshan Fault (龙门山断层).
The United States Geological Survey published a report earlier this year linking fracking to increased micro-earthquake activity. The report found that an "unprecedented" increase in earthquakes in Middle America was definitely caused by humans. However, what activity led to more earthquakes is still unknown:
"It remains to be determined how [earthquakes] are related to either changes in extraction methodologies or the rate of oil and gas production."
Proponents of fracking in China point to the massive decrease in coal use in the US. In 2011 carbon dioxide emissions in the US dropped for the first time in decades. The world's largest consumer of energy eliminated 92 megatons of CO2 emissions largely by cutting the use of coal and accelerating the use of natural gas in energy production, according to an IEA study.
Arguments over the safety and efficacy of hydraulic fracturing may be largely moot as the Chinese government has already set extraction targets for the foreseeable future. Chinese shale gas production is expected to reach 6.5 billion cubic meters by 2015 and 100 billion cubic meters by 2020, much of it coming from Yunnan, Sichuan and Xinjiang.
Editor's note: Special thanks to Colin Flahive for contributing research for this article.