Chinese shale gas production to reach 17 bcm in 2020
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.