3
• Shale gas “Development Plan”: produce 6.5 Bcm shale gas in 2015 and 30 Bcm in
2020. 4 national demonstration areas. Nesrec has been established.
• Shale gas as an independent mineral, has already finished two rounds of exploration
right bidding.
• By the end of 2018, shale gas will have national financial subsidiary(0.2RMB/m3 ).
Shale gas price will be market driven.
1. Chinese Government inspired shale gas E&D
United States has promoted China to speed up the shale gas exploration,
development, construction and production.
Government preferential policy support
4
2. Shale Gas E&D status
1. Abundant Chinese marine shale resources
China's shale gas resources evaluation results are different, but its all
agreed that China has a great resource potential and southern Marine
shale should be focused
5
2. Jiaoshiba、Wiyuan-Changning、Zhaotong all have commercial
breakthrough, the industrial production has been started
Development history
2010: Established Changning-
weiyuan, and Zhaotong
2011:Established Yan-an
2013:Established Fuling
Industrial production start
2018: Produced 43×109m3
2019: Drilled 700 wells so far
2019: Produced 67 ×109m3
中国石油
中国石化
延长集团
国土资源部
北京
西安
成都
重庆
China shale gas E&D map
Weiyuan-Changning
Fuling
Yan-an
Zhaotong
6
3. Shale gas exploration is progressing in these 30 bidding blocks
Black shale is shown in Yuqian-Chuannan block
Shale gas content is good in lower Cambrian Guizhou block, now is fracturing.
Shale has been found in Hubei LaiFeng-Xianfeng block
Shale gas content is good in Hunan Baojing block
Shale gas content is good in lower Cambrian in Chongqin Cheng Kou Block
Hunan Longshan, Guizhou ,Chongqing –Qianjiang and etc. are all processing the drilling work
8
1) Mining rights of shale gas
PetroChina has 10 shale gas blocks in the Sichuan basin, with an area
of 64 ×103 km2
Mining rights distribution in Sichuan Basin, PetroChina
No. Block
Mining
right
(Km2)
1 luxian-Changning 5947
2 Muchuan-Yibin 5256
3 Neijing-Jianwei 6845
4 Shuifu-Xuyong 6818
5 Dazu-Zigong 5388
6 Bishan-Hejiang 6862
7 Anyue-Tongnan 6680
8 Xuanhan-Wuxi 6881
9 Zhongxian-Fengdu 5813
10 Junlian-Weixin 7760
Total 64249
1. CNPC shale gas E&D
9
2) E&D history
Comprehensive geological evaluation of shale gas
Drilled the first commercial shale gas well, Ning201-H1, with high production
Drilled and fractured the first vertical shale gas well, Wei201
First factory-like operation wellpad in China
Constructed the shale gas pipeline and 2 demonstration area in China
Drilled and fractured the first horizontal well, Wei201-H1, in China
2007
2009
2011
2012
2013
2014
PetroChina invested 20 billion to promote construction of 2 demonstration
areas, Changning~Weiyuan and Zhaotong.
Great progress has been made in shale development.
More than 150 wells, production exceeded 12×109m3
More than 350 wells, production exceeded 43×109m3
2016
2018
10
2D: 6000km, 3D: 1000 km2
300 wells drilled
56 wells completed
3) Exploration & Development Status
Highest well: 130×106m3/d
Daily production: 1.3×106m3/d
Highest EUR:300×106m3
Production well : 220
Daily production: 17×106m3/d
Production in 2018: 4.3×109m3
Shale gas pipeline in Changning
Changning pipeline: 150km
transport capacity of 3×10m9/a
In 2019
11
Drilled 50 vertical wells to target two sets of marine facies shale.
Set up geologic evaluation methods, select favorable areas to develop.
1) Drilling evaluation technology
Features
U.S and others
China
Sichuan
Shale thickness (m) 35-350 30-210
Buried depth (m) <4200 <4000
Organic abundance
(%) 3-10 2.2-5.3
MaturityRo(%) >1-2 2.8-3.2
Gas content
(m3/t) 0.8-9.9 1.61-5.5
mechanics(GPa) 20-63 13-39
Porosity(%) 2-8 2.9-5.2
Brittle mineral content(%) >40 50.3-67.9
Resource
abundance(108m3/Km2) 2.2~8.9 4.3~5.4
Pressure coefficient >0.9 >1.2
Geologic evaluation Key parameters
TOC
Ro Burial depth
Thickness
Minerals
Physical property Geomechanics
Gas content
Preservation Production capacity
2. Main Technology Progress
12
12 12
The favorable areas of Changning-Weiyuan, Fushun-Yongchuan, Zhaotong
have been confirmed with geology reserves of 6×1012 m3 (10000Km2)
Block (Km2) Area (109m3) Resource
abundance
Changning 2050 920
Weiyuan 4216 1890
Fushun-Yongchuan 2000 1000
Zhaotong 1400 500
Total 9666 4310
Characteristics evaluation parameter
High quality shale thickness (m)
>30
Shale buried depth (m) <4000
Pressure coefficient
>1.2
favorable areas
Evaluation parameters
Longmaxi Formation in Southern Sichuan Basin
威远
长宁
富顺-永川
Fushun-yongchuan
13
2) Research technologies increase single well production
North American multi-stage fracturing of horizontal wells.
Domestic E&D engineering techniques, key tools.
• Horizontal well path control
•horizontal well drilling fluid technique
•horizontal well safe and quick drilling
3D H-well drilling drilling rate and cyle
1st 2-nd
1st 2-nd
3main horizontal well drilling techniques
14
By introducing techniques from abroad and developing independently,
shale gas SRV fracturing technology has been formed
• Fracturing design
• Horizontal wells multi-stage fracturing
• Large-scale shale gas operation
• Fast drillable bridge plug
• Clustering perforation tool
• Recoverable slick water/ fracturing
fluid Fracturing site of shale gas
horizontal well
3 main fracturing techniques
2 tools and liquid systems developed
independently
Self-made Composite bridge plug
15
Microseismic monitoring of surface, shallow and deep well
Micro seismic monitoring truck
Downhole geophone
Monitoring of H2
SRV: 378 ×106m3
Fracture length: 300~1100m
width:150-700m
height: 140-2200m
16
3) “Factory-mode” was tested, improving work efficiency and reducing cost
wellpad reduced drilling cycle from
150 days to 43 days.
“zipper-like” fracturing increased
daily fracturing stages from 2 to 4
Wellpad is more effective.
A wellpad with 6 wells can save
70% of land usage.
Cost reduced more than 20%.
Changning H3 wellpad
17
Drill 230 wells in 2 pilots during 2014-2019
Processing capacity: 2.5×109m3/year
production in 2015: 2.6×109m3
WELL 2 WELL 1
3. Pilot area shale gas development
Drilling pad :63
Drilling bit: 105 (3 pilot block)
Drilling well: 118 (70 completed)
18
1) International cooperation
2009: Shale gas evaluation
cooperation with Shell
2013: PSC contract was approved by
Commerce Department of China,
2015: ODP project
Ccooperation with BP which will
end before 2015
Drilling: 22wells
Completed: 21wells
Finished: 17 wells
Wells put into
production:11
Cumulative commercial gas
production: 87x106m3
Evaluation cooperation with
HESS, drilling some appraisal
wells are in 2015
4. Shale gas development cooperation
Fushun-Yongchuan
Neijiang-Dazu
Northern Rongchang
19
Company completed registration
and start operating and producing
Company completed registration,
start preliminary exploration
work
Its registering and ready to
operate
Sichuan Ltd
Chongqing Ltd
Changning
Shell
BP
Rist cooperation
Sichuan Basin shale gas pilot area distribution
CNPC
CNPC ZheJiang
ChangNing Ltd.
Chongqing Ltd.
Sichuan Ltd.
2) Domestic cooperation
21
The D&C cost of horizontal wells is high
Horn River shale gas development cost
2007年 2008年 2009年 2010年 2011年
Item 2007 2008 2009 2010 2011
Average fracturing stages in a well 3.0 8.7 13.5 19-29 19-29
Drilling and fracturing costs $/Mcf 6.78 3.2 1.6 0.87 0.74
1. Challenges
Challenge 1: Cost
• Single well cost : around 16 MM $ (early)
• Dropped to 10 MM$ (recent).
22
Challenge 2: Engineering techniques
Safe and quick drilling techniques for long horizontal sections
• Formation collapse and casing deformation extend the well construction cycle
• key tools need to be introduced, such as rotary steering
Staged fracture techniques for horizontal wells
• Complex ground stress, difficult fracturing
• Limited work capacity of coiled tubing restricted the practicability of staged
SRV fracturing.
23
Challenge 3: Prediction of ultimate recoverable reserves of gas wells
Production decline of U.S gas wells Gas production of well H1
Maximum production time 2 year ( H1).
Not shown all features of gas well performance in 2 pilot areas,
EUR prediction inaccurate.
24
Challenge 4:Safety and Environmental protection
Fracturing fluid and flowback fluid may lead to environment
pollution
LRET oil based mud recycling station Pyrolysis adsorption
processing site diagram
25
1-step: 2014-2015, to achieve production of 2.6×109m3 in 2015. “factory” operation will
be tested further to find out a profitable development path of shale gas that fits China's
conditions and geological characteristics.
2- step: 2016-2020, horizontal wells will be drilled in Sichuan basin , “factory” operation
will be extensively promoted. Meanwhile, new favorable areas of shale gas will be
evaluated in search of new core area of shale gas, to provide material resources for
increasing production.
3- step: 2021-2030, based on Sichuan basin marine facies to develop shale gas. And then
new pilot areas of shale gas will be found. Thus gradually enhance the shale gas
proportion in nature gas industry.
PetroChina’s 3-step” strategy for shale gas development
2. CNPC“Three Steps”Strategy
26
PetroChina is looking at 70×109m3 of shale gas production in 2019 and
120×109m3 in 2020 .
No Block
Production of
2019
(109m3)
Production
of 2020
(109m3)
1 Changning 35 5.5
2 Weiyuan 30 4.5
3 Zhaotong 5 1.5
4 International
cooperation area 0.1 0.2
5 New cooperation
area in Sichuan 0.2
6 Cooperation area
in Chongqing 0.1
Total 70 12
3. Future Prospect
Production plans of shale gas
Si chuan
Chongqing
Changning
International cooperation
Risk cooperation
CNPC
Zhe jiang
CNPC pilot area & cooperation area(2015-2020)