Europe's largest oil company
Royal Dutch Shell plc
) and Chinese energy giant
PetroChina Co. Ltd.
) are producing natural gas from their Changbei project at a much
cheaper rate compared to similar developments. In fact, the
direct unit operating cost - at around $1 per barrel of oil
equivalent - is 91% less than the average lifting cost expended
by PetroChina in 2012.
The first phase of the Changbei joint venture in northern China's
Shaanxi province came online in 2007 and is set to churn out 3.3
billion cubic meters of natural gas annually at its peak.
Shell and PetroChina are looking expand their operations in the
field, as China moves to reduce its energy dependence from coal
to cleaner sources like natural gas. At present, two-thirds of
China's electricity is generated by coal-fired power plants,
which emit greenhouse gases that lead to pollution.
Shell has invested $1 billion in China this year, as it tries to
tap the country's huge unconventional gas potential. The
supermajor - operator of the Changbei development - said that it
is drilling additional test wells in the second phase of the
project, which is expected to bring a significant amount of
Royal Dutch Shell and PetroChina are two of the biggest
integrated energy firms in the world with a strong and
diversified portfolio of development projects that offer
attractive long-term opportunities. Both the stocks carry a Zacks
Rank #3 (Hold), implying that they are expected to perform in
line with the broader U.S. equity market over the next one to
However, some better-ranked energy stocks include
SM Energy Co.
Abraxas Petroleum Corp.
). These domestic upstream energy operators - sporting a Zacks
Rank #1 (Strong Buy) - have solid secular growth stories with
potential to rise significantly from current levels.
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
PETROCHINA ADR (PTR): Free Stock Analysis
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
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