Chi­nese shale gas pro­duc­tion to reach 17 bcm in 2020

Chemical Industry Digest - - News & Views -

Chi­nese shale gas pro­duc­tion is ex­pected to reach 17 bil­lion cu m (bcm) in 2020. Chi­nese shale gas pro­duc­tion has seen marked progress over the last decade, ris­ing to nearly 600 wells last year, with nearly 700 new wells ex­pected to come on stream in 2018-20 from Sinopec’s Ful­ing, Petro China’s Changn­ing- Weiyuan, and Zhao­tong projects in Sichuan basin.

“The speed of shale devel­op­ment will im­pact global gas mar­kets. Con­sid­er­ing the im­pact of shale gas pro­duc­tion on do­mes­tic de­mand, the 2020 13-bcm ‘gap’ will have to be filled by im­ports, in par­tic­u­lar LNG,” added Lynn-Yuqian Lin, an­other WoodMac con­sul­tant. China’s shale for­ma­tions tend to be deeper, more tec­ton­i­cally frac­tured and of­ten less-pres­sured than US plays. Above ground, most of China’s shale gas plays are in moun­tain­ous ter­rain. Op­er­a­tors must re­move moun­tain­ous land to host well sites, build in­fra­struc­ture, and trans­port drilling crews and equip­ment across vast dis­tances. High pop­u­la­tion den­sity also makes drilling and hy­draulic frac­tur­ing harder. Chi­nese NOCs, how­ever, are de­vel­op­ing their un­der­stand­ing of the unique ge­ol­ogy, adopt­ing a pad-based drilling, frac­tur­ing and pro­duc­tion process, and com­bin­ing it with more in­dige­nous tech­nol­ogy and drilling and com­ple­tion tech­niques—frac­tur­ing trucks, drill­able bridge plugs, and drilling tra­jec­tory con­trol know-how, WoodMac said.

Chi­nese shale well costs are still much higher com­pared with the US, but a re­cent turnkey con­tract for drilling, ce­ment­ing, and com­ple­tion of four Sichuan wells at an all-in cost of $7-7.5 mil­lion/well, won by Honghua Group, is a 20% drop in well cost vs. 2017, once pad con­struc­tion, in­fra­struc­ture, and fa­cil­i­ties costs are in­cluded.

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