Page 10 - AsianOil Week 44 2021

AsianOil EAST ASIA AsianOil

Could shale rescue China’s

depleting oil reserves?

PERFORMANCE SOURCES in China this week have indicated the
presence of a sizeable deposit of shale oil at one of
the nation’s largest existing operational oilfields.
The discovery by Sinopec, part of the world’s
largest refining and petrochemical conglomer-
ate, is estimated to be a roughly 458mn tonne
deposit in the region of its Shengli field in the
extreme north-east of the country, around 1,200
km from Beijing.
The Shengli field has been in operation
since the mid-1960s and has a current output
of 650,000 barrels per day (bpd) and proven oil
reserves of almost 5bn tonnes. It is the second
largest oilfield in China.
Shale output in China is surprisingly low
at present at around 35,000 bpd, a number
accounting for less than 1% of national daily
output.
The industry is centred largely in the north The general manager of the Daqing oil-
and north-west of the country in the Ordos and field, Fang Qing, said on regional Chinese TV
Jungar basin regions. that “[The] Gulong shale oil campaign helps
Significantly more effort has been put into to cement Daqing’s position as China’s larg-
developing shale in recent months across China, est onshore oilfield as it struggles [to] replace
and the timing could not be better for Beijing. [national] reserves [and that] it contributes to
With current output from the nation’s larg- ensure national oil supply security.”
est oilfield – Daqing – starting to show signs of Whilst understood to contain a high-qual-
depletion, shale may have to play a bigger role to ity form of light oil, the return from 17 of 58
help maintain China’s current nationwide output wells sunk so far in 2021 is not impressing all
of 4mn bpd, which accounts for almost a third of regional analysts. Around 40 more wells are
its daily consumption. expected to be sunk prior to the end of the year
Another discovery made public in October – to shore up data on the location and constitu-
at Gulong in the Daqing oilfield – is said to rival tion of the deposit.
the Shengli find and is now on course to start Shale reserves across China are said to be
producing oil by the middle of the decade, with immense, although at present, infrastructure
capacity then being forecast to double by 2030. aimed at retrieving the oil from them remains in
China National Petroleum Corp. (CNPC) the early stages of development.
officials have indicated in recent weeks that Back in Shengli, exploration projects were
this will equate to 2mn tonnes each year undertaken as early as 2019 with Royal Dutch
when operating at full capacity. The pros- Shell, albeit in a different area to the recently
pects at present, though, do not look good announced discovery.
for profitability, with a CNPC spokesman The estimated 3.34bn barrel deposit is, how-
saying the company is only looking eventu- ever, thought to be located at a depth of over
ally to achieve a break-even cost somewhere 3,000 metres and using current technology can
below $55 per barrel. only be extracted at the relatively slow rate of 171
tonnes per day.
Reports from the site do indicate the crude
pumped up from that depth is similar to that in
Gulong, and to have very limited workable levels
of viscosity.
The state-run Xinhua News Agency quoted
the chief expert in development geology at the
Shenglu oilfield, Yang Yong, as claiming there
were “no precedent for successful develop-
ment of shale oil as thick as this in the world”,
adding that Yang went on to list a number of
technological problems that effective pro-
cessing would encounter before becoming
remotely profitable.™

P10 www. NEWSBASE .com Week 44 04•November•2021