China's energy giants Sinopec Corp and PetroChina have upgraded their outlook on the country's shale gas industry, citing steadily declining costs and rising domestic gas prices, but ruled out the possibility of a shale gas boom in the near future, sources reported.<br /> <br /> The cost of shale gas drilling at Sinopec's Fuling field in southwestern China’s Chongqing City - the country's largest shale gas project - has been falling steadily to about 60 million yuan ($9.8 million) per well, Chairman Fu Chengyu said at the firm's interim results briefing in Hong Kong on September 1.<br /> <br /> Fu expected costs to decline to 50 million yuan per well within three to five years, citing better expertise and experience.<br /> <br /> Fu's optimism was echoed by PetroChina's vice chairman and president Wang Dongjin, who told reporters on August 28 that the company had decided to kick off shale gas development this year with a 7 billion yuan budget.<br /> <br /> PetroChina is keeping its drilling cost at 55 million yuan per well and will strive to keep it under 50 million yuan, and the average time PetroChina spends on shale gas drilling - a process known as hydraulic fracturing - had fallen to 45 days per well from over 80 days, Wang said.<br /> <br /> At Fuling, where Sinopec is building the first phase of the project, the company aims to put in annual production capacity of 5 bcm by end-2015, Fu said. By end-2017, Sinopec will double it to 10 bcm.<br /> <br /> PetroChina's Wang said his company will have annual shale capacity of 2.6 bcm by end-2015 and overtake Sinopec in terms of shale gas output in the next few years.<br /> <br /> However, China, estimated to hold the world's largest technically recoverable shale resources, faces serious challenges to monetize its shale gas reserves from water shortages to complicated geological structure and a lack of infrastructure.<br /> <br /> <p> The country early last month halved its 2020 shale gas production target to 30 billion cubic metres (bcm), versus an earlier goal of 60-80 bcm mapped out in 2012, according to the National Energy Administration. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140903/20140903100122_5562.jpg" alt="" /> </p>