David Fickling is a Bloomberg Opinion columnist who covers commodities and industrial and consumer companies for a handful of well-respected publications. He stated that Hong King-based analyst Jefferies LLC speculated that a “shakeup of regulations” on China’s petroleum production this month could create a new sector of independent upstream producers like those that transformed the U.S. energy industry over the last decade. Instead of importing so much oil (overtaking the U.S. as the largest importer), the country would have a new steady stream of oil coming from within its own borders. Sound familiar?
First, an oil and gas revolution in US Shale Plays…now China?
Fracking created an oil and gas revolution in the United States. It’s why we have continued success in the shale plays, such as the Bakken, the Eagle Ford, the Permian Basin, and more.
But could the very thing that put US shale plays on the map cause a revolution in China?
Yet Fickling notes that despite the fact China has had all the technology and insight that has come with the shale revolution, companies there have not seen the massive growth seen in other areas of the world. Fickling says, “The best explanation isn’t that the country’s big three oil companies are an oligopoly — though they are — but that China’s geology is fundamentally more difficult than that of North America. Many prospective fields are buried deep below the surface. To make matters worse, they’re often riven with seismic faults from the slow collision of continental plates that have built the Himalayas and the Japanese and Philippine island chains.”
So it’s geology…and that isn’t going to change anytime soon.
Read the entire article at Bloomberg.