CNOOC strikes it big time offshore with first-ever shale breakthrough

Chinese State-owned oil and gas giant China National Offshore Oil Corp has tapped commercial flows of oil and gas from a shale exploration well in the South China Sea, the first successfully drilled shale oil well offshore.

The country’s first offshore shale oil exploration well Weiye-1, located at the southwestern trough of Beibu Gulf Basin in the South China Sea, tested daily production of 20 cubic meters of oil and 1,589 cubic meters of natural gas, said the country’s top offshore oil and gas driller on Thursday in a release.

Beibu Gulf Basin holds around 1.2 billion metric tons of prospective shale oil resources with broad prospects for future exploration, it said.

Shale oil is an unconventional product derived from oil shale rock fragments.

An analyst said the breakthrough further enhances the country’s domestic energy supply capacity and the unconventional oil and gas resources will play a bigger role than ever in China’s clean energy future.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said the discovery will ensure increasing oil and gas output over the long term while contributing to national oil supply security.

“With tremendous shale oil and shale gas resources, China is the second country to have achieved breakthroughs in the sector after the United States, and China should attach more importance to the exploration and exploitation of unconventional oil and gas to further reduce reliance on oil and gas imports,” Luo said.

“China has sufficient shale oil and shale gas resources, which are major alternative energy options after traditional oil and gas. The country’s breakthrough in offshore shale oil development is another milestone for the sector and the move will further ensure the country’s energy security.”

Domestic oil giants, including CNOOC, China Petrochemical Corp and China National Petroleum Corp — the country’s largest oil and gas producer and supplier — are all making greater efforts to tap shale deposits despite their geological challenges and higher costs, amid government calls to boost domestic energy supply security.

China Petroleum and Chemical Corp — also known as Sinopec and the world’s largest refiner by volume — said last year that the company has discovered an initial 458 million tons of geological shale oil reserves in Shandong province’s Shengli Oilfield, one of the country’s largest conventional oil and gas fields.

CNPC also discovered a major shale oilfield in Daqing, Heilongjiang province last year with predicted geological reserves of about 1.268 billion tons, which it said will further boost output in the country’s biggest oilfield while ensuring national energy security.

The company aims to produce more than 1 million tons of shale oil annually by 2025 from the Gulong shale oil formation in Daqing, it said.

By late 2021 China produced only 35,000 barrels per day of shale oil, mostly in the onshore northern Ordos Basin and northwestern Junggar Basin, according to Reuters.

Xu Changgui, general manager of CNOOC’s exploration department, said the breakthrough of offshore shale oil exploration represents a major technological milestone.