By Chen Aizhu
BEIJING, Nov 13 (Reuters) - Royal Dutch Shell andChina's Sinopec Corp are drillingexploration wells to test shale potential in central China,where little prospecting for the fuel has been done, companyofficials said on Thursday.
China, believed to hold the world's largest shale gasresource, has drawn international firms like Shell, Exxon Mobil, Chevron, Eni and Total tohunt for the unconventional gas, with Shell the first among themto land a production sharing contract.
Shell and Sinopec have completed drilling Liye-1, one ofthree exploration wells planned in a joint evaluation of shaleresources at Xiang E Xi (XEX) block, at the junction of centralHunan, Hubei and Jiangxi provinces in east central China.
The joint study agreement (JSA) on the XEX block was enteredinto in June 2012 but has not been widely reported.
A Sinopec official said the Liye-1 well was completed lastAugust but was subsequently sealed after results from hydraulicfracturing were not "very satisfactory". The official declinedto be named as he's not authorized to speak to media.
Shell and Sinopec are now drilling the second well, Engye-1,and a third one is also planned, officials said. Sinopec is theoperator of the project.
China, still in the early stages of developing the fuel, hasdrilled less than 150 exploration wells, mostly in and aroundthe Sichuan basin in southwest China. Commercial output istiny.
In Sichuan, Shell is conducting appraisal drilling of theFushun-Yongchuan block in partnership with top Chinese oil andgas producer PetroChina . The two arelooking to start commercial production after 2014.
Shell secured China's first shale gas product sharingcontract in March last year to develop the Sichuan block, hopingthat getting in early would allow it to be the biggestbeneficiary from the sort of shale boom that has transformed theU.S. energy market.
Much of the $1 billion investment Shell spent this year onChina's upstream business went to Sichuan, Shi Jiangtao, a ShellChina spokesperson said in an email.
A former Shell executive said last year that Shell plans tospend at least that much a year exploring China's shale gas.
The major in August revealed a $2.2 billion charge againstits weak U.S shale business and abandoned its 2017 goal todeliver 4 million barrels per day of total production.
CEO Peter Voser said in October it will take a longer timethan expected for Shell to reap benefits from its global shalegas projects due to poor short-term results.
