Three major oil companies compete to develop shale gas

China Petroleum & Chemical Corporation recently announced that its wholly-owned subsidiary, International Petroleum Exploration and Development Co., Ltd., has signed an agreement with Devon Energy of the United States to acquire Devon’s three equity interests in five shale oil and gas assets in the United States for US$2.2 billion. one.

This is the first time the company has been involved in the field of shale gas resources in the United States. Previously, in December 2010, China National Offshore Oil Corporation had purchased the second-largest natural gas producer in the United States, Chesapeake Energy Corporation, with a 33.3% interest in the Yingtan shale oil and gas project in southern Texas.

Shale gas is an unconventional natural gas that occurs in organic-rich shales and its interlayers. It is mainly composed of methane, and it is a clean and highly efficient energy resource and chemical raw material. In recent years, the United States has made a qualitative leap in the exploration and development of shale gas, which has greatly increased the country’s energy self-sufficiency rate and reduced its dependence on energy. In 2015, shale gas production in the United States will reach 260 billion to 280 billion cubic meters, accounting for one-third of the total natural gas production.

While “going out” to purchase foreign shale gas assets, China’s domestic shale gas exploration and development are actively carried out.

Chen Xianda, secretary general of the China Mining Association, said that China and the United States have similar geological conditions. Preliminary exploration shows that China's shale gas recoverable resources are about 31 trillion cubic meters, which is equivalent to conventional natural gas.

Since 2010, shale gas exploration in China has made breakthroughs in succession. Progress has been made in the marine shale strata, the Ordos Basin, and the Sichuan Basin's Mesozoic continental shale strata in southern China. As of June 2011, 16 pages have been drilled. Among the rock exploration wells, 10 have obtained daily output of more than 2000 cubic meters of shale gas, showing good prospects for the development of shale gas.

Now, the three major oil companies have already made breakthroughs in the exploration and development of shale gas. In December 2011, China National Offshore Oil Corporation started an earthquake operation in the shale gas exploration project in the western part of Lower Yangtze in Wuhu, Anhui Province. This project is the first oil and gas (shale gas) exploration project onshore acquired by CNOOC, covering an area of ​​more than 4,800 square kilometers.

It is reported that at present, Sinopec has drilled more than 10 exploration wells in southeastern Fujian, Southeast Yunnan, western Hubei, northeastern Sichuan, Biyang, Jianghan, and Weinan. Among them, 6 wells have obtained industrial gas flow, and drilled and fractured horizontal wells. China National Petroleum Corporation selected four blocks of Weiyuan, Changning, Zhaotong and Fushun-Yongchuan in southern Sichuan and northern Anhui, drilled more than 10 exploration wells, and obtained 7 industrial wells for drilling and drilling and fracturing horizontal wells. Mouth, drilled and drilled horizontal wells.

While oil companies are increasing their exploration and development of shale gas, the recent favorable news about shale gas at the policy level has continued to appear. At the end of December 2011, the State Council approved shale gas as a new independent mineral, making it the 172th independent mineral in China.

At the same time, at the end of December 2011, the “Foreign Investment Industry Guidance Catalogue (Revised in 2011)” issued jointly by the National Development and Reform Commission and the Ministry of Commerce was issued, and shale gas exploration and development (limited to joint ventures and cooperation) were included in the encouraged category.

At present, the Ministry of Land and Resources has completed the first round of bidding for the prospecting right of shale gas exploration, introduced a variety of investment entities, acquired exploration rights through competition, agreed the exploration period and investment through the contract, and supervised and encouraged the successful bidder to perform the contract through supervision. For those who have failed to complete the contractual commitment investigation, the prospector shall partially or completely withdraw from the block.

It is worth noting that the strategic investigation and exploration and development of shale gas resources in China are at the initial stage, and there is a big gap between the degree of industrial development and developed countries. China has not yet formed core technologies in the evaluation and development of shale gas resources, and it is difficult to achieve the requirements for large-scale mining. Industry insiders also stated that in the early stages of shale gas exploration and development, the risks and costs are high. They should learn from the policies and measures for supporting CBM development in previous years. The government should provide corresponding policy support in finance, finance, and taxation.