Lack of water availability could curtail shale gas development in the world's largest energy producer, according to the World Resources Institute (WRI).
China has the world's largest source of recoverable shale gas but 61 percent of that is located in areas with high aridity and baseline water stress - the ratio of total annual water withdrawals to available annual renewable supply - the WRI outlined in a new report.
"Limited or unpredictable water availability can jeopardize a project's financial viability. In areas with high demand relative to the available supply, added water withdrawals for drilling and hydraulic fracturing operations can deplete water resources and degrade the environment," the report said.
But leading energy producers PetroChina and Sinopec made no mention of water-related challenges when voicing a bullish outlook on the shale industry in August, citing declining costs and higher domestic gas prices as catalysts for increased investment.