(EnergyAsia, November 27 2012, Tuesday) — China aims to produce 250 million tonnes of oil and 450 billion cubic metres of natural gas by 2030, up from 203 million tonnes and 101 billion cubic metres respectively last year.

According to the Ministry of Land and Reserves, the bulk of the new production will come from using new technology to exploit shale and unconventional reserves in the country’s northeastern and western regions, and deepwater offshore fields.

But the ministry’s bullish projections have been given a reality check by the International Energy Agency (IEA) which said China’s growing water shortages could impede its plans to expand oil and gas production.

In its latest World Energy Outlook report, the IEA took note of the world’s rising water needs for energy production, which it estimated are set to grow at twice the rate of energy demand.

“Water is essential to energy production: in power generation; in the extraction, transport and processing of oil, gas and coal; and, increasingly, in irrigation for crops used to produce biofuels.

“We estimate that water withdrawals for energy production in 2010 were 583 billion cubic metres (bcm). Of that, water consumption – the volume withdrawn but not returned to its source – was 66 bcm. The projected rise in water consumption of 85% over the period to 2035 reflects a move towards more water-intensive power generation and expanding output of biofuels.”

The IEA said that in some regions, water constraints are already affecting the reliability of existing operations and they will increasingly impose additional costs.

In some cases, they could threaten the viability of projects. The vulnerability of the energy sector to water constraints is widely spread geographically, affecting, among others, shale gas development and power generation in parts of China and the US, the operation of India’s highly water-intensive fleet of power plants, Canadian oil sands production and the maintenance of oil-field pressures in Iraq.

While acknowledging that China has the world’s largest shale gas reserves at 36 trillion cubic metres, the IEA said the bulk of it is located in Xinjiang and provinces that face severe water scarcity.