Sinopec is working with a specialist company on researching advanced wastewater treatment solutions and is likely to sign a contract for collaboration on the research project this summer, a senior Sinopec engineer at the Fuling shale gas field told Interfax.

“Sinopec has invested a significant amount of money on advanced wastewater treatment to deal with fracking flowback and aims to bring down the cost of treatment to RMB 24 ($3.28) per cubic metre in the near term, and eventually RMB 12/cm,” said the engineer, who works at the Jiaoshiba play and spoke on condition of anonymity.

The engineer declined to name the company but said a contract is being discussed and could be signed in June.

Sinopec tested a forward osmosis system – which uses a membrane to filter water – from United States-based Oasys Water at a shale gas field in the US last August. The so-called membrane brine concentrator (MBC) technology can be used to treat fracking wastewater.

Sinopec was tipped last year to team up with water treatment company Beijing Woteer Water Technology, which invested in Oasys in September 2013 and is its Chinese partner.

A final agreement has been delayed a number of times and the two companies remain in discussions. China’s use of Oasys’s MBC technology is so far confined to desalinating seawater in Huanghua in Hebei province and treating wastewater produced by a coal-fired power station in Changxing in Zhejiang.

Sinopec’s Fushun Research Institute of Petroleum and Petrochemicals jointly established a new laboratory with Woteer in Beijing in October to explore using forward osmosis in upstream and downstream oil and gas, and power industries.

The engineer said there are three different levels for treating flowback. The first is simple sedimentation, which passes wastewater through a settling tank.

The second, called ‘initial treatment’ and used by Sinopec, involves killing bacteria and separating metals from the water. It can be reused for fracking once it passes a chemical oxygen demand test, which measures the water’s purity. It costs around RMB 10/cm.

The third level is similar to distillation, after which the recycled water is clean enough to use in agriculture. The cost is RMB 70/cm, but Sinopec aims to work with the company to lower it to RMB 12/cm and then apply the solution widely in its shale blocks.

“The third level is very expensive – we do not think we can use it in our blocks on a massive scale within the next five years, because it can only be used when fracking has stopped and there are large volumes of flowback,” the engineer said.

Sinopec is also looking into solutions for reducing drill cutting discharge and contamination of cuttings by hydrocarbons.

Regulations looming

With the environment now a contentious social topic in China, local experts have raised concerns about possible water pollution caused by shale exploration, and there is talk of drafting specific environmental regulations for shale gas.

But little progress has been made with the regulations and it will be a while before they are released, Tian Chunxiu, a researcher at the Policy Research Centre for Environment and Economy at the Ministry of Environmental Protection, told Interfax.

The Sinopec engineer said he did not support a standalone environmental regulatory framework for shale gas and argued regulations governing industrial wastewater were already adequate. Effluent from Sinopec’s fracking operations complies with the GB18918-2002 standard for wastewater discharge, which came into effect in July 2003.

The first phase of drilling at Jiaoshiba will finish in June and Sinopec aims to complete development design work for the second phase in the same month. The work will set out cost, profit and well count targets, with around 210 wells likely to be drilled.

Sinopec drilled five wells to help inform the development design work for the second phase, and the collected data indicates the second phase of drilling will cost around 30% more than the first because of greater challenges.

“Most of the gas we’ve found is at a depth of around 3,000 metres, so the cost will be higher,” said the engineer. He added the second-phase wells are expected to have an average output of 40-50 thousand cubic metres (Mcm) compared with 60-100 Mcm in the first phase.

China missed its shale gas output goal in 2014, producing 1.3 billion cubic metres against an expected 1.5 bcm. China National Petroleum Corp. researchers expect output to reach 3.5 bcm in 2015 – just over half of the longstanding 6.5 bcm target for this year.