China has been slow to tap its huge shale gas resources, the largest in the world, and may take at least 10 years to start producing "substantial" quantities of the fuel, an independent U.S. energy company said.

It's very unlikely that China can meet its production targets for 2015 and 2020, Chris Faulkner, Chief Executive Officer of Breitling Oil and Gas Corp., said today in an interview in Beijing.
 
Delays in shale-gas production plans may increase China's imports of liquefied natural gas and curb expectations the country can replicate the U.S. shale boom. China plans to speed up exploration of the resource and has pledged to prioritize land approvals, allow tax-free equipment imports and offer subsidies to companies tapping the unconventional fuel.

China aims to produce 6.5 billion cubic meters of shale gas by 2015 and set a target of 60 billion to 100 billion cubic meters by 2020, the National Development and Reform Commission said. The U.S. produced 96 billion cubic meters in 2009, overtaking Russia as the world's biggest natural gas provider.

China has 25.08 trillion cubic meters of exploitable onshore shale-gas reserves, the land ministry said on March 1. That's part of an estimated 134.42 trillion cubic meters of total gas reserves in the country, according to the ministry.

"Nobody denies the huge potential, but having reserves is one thing and turning them into a real product is quite another," Faulkner said at the venue of a two-day Shale Gas Summit organized by the Centre for Management Technology.

Slow Drilling

China drilled 50 shale gas wells in the past year, compared with 1,300 a month in the U.S., Faulkner said.

It takes "three to five years" for a shale gas discovery to start commercial production and an extensive pipeline network is needed to transport the fuel to consumers.

China is "way behind" in both well-drilling and infrastructure construction, Faulkner said.

China plans to speed up shale gas exploration by asking explorers to invest three times the minimum amount sought for crude oil areas.

The Ministry of Land and Resources is drafting rules that will allow it to seize blocks from companies that fail to invest at least 30,000 yuan ($4,758) per square kilometer annually, Zhang Jianfeng, a director at the ministry's research institute, said in an interview today.

Drilling in China will be "at least three times more expensive" than in U.S. because of different geological structures, Faulkner said.

Breitling, based in Irving, Texas, hasn't made progress in talks to form ventures with PetroChina Co., China Petroleum and Chemical Corp. and Cnooc Ltd. (883), to tap shale gas resources, Faulkner said.