Chinese offshore operator CNOOC Ltd is making a move into onshore unconventional gas exploration and development as part of its plan to boost gas production to help China achieve its ambitious target of carbon neutrality by 2060.

“CNOOC will aggressively develop unconventional gas by boosting tight gas operation, maintaining coalbed methane production, making initiatives to explore shale gas,” chairman Wang Dongjin said at a recent internal meeting.

CNOOC Ltd has won licences from the Ministry of Natural Resources to explore 36 onshore blocks in 10 provinces, including Shanxi, Shaanxi, Jiangxi and Anhui, according to its chief geologist, Xie Yuhong.

In 2019, the state-controlled player completed the acquisition of 100% equity in China United Coalbed Methane (CUCBM), which largely focuses on CBM production in the Qinshui basin and the eastern edge of the Ordos basin.

At the end of last year, CNOOC Ltd’s onshore reserves represented 0.2% of its total reserves of 5.2 billion barrels of oil equivalent, while onshore production represented 0.9% of 506.5 million boe it produced in 2020.

Xie said that CNOOC Ltd has made headway in the past five years in unconventional gas exploration — particularly tight gas — having added 100 billion cubic metres of gas reserves to its portfolio. However, it has only just started exploration for shale gas.

Output boost hopes

The company also faces challenges in raising the efficiency of CBM development, Xie added.

CNOOC Ltd has already made a commitment to supply about 2 Bcm of gas to Shanxi in 2022, out of the northern province’s master plan to produce 22 Bcm of gas in that year.

It is licensed to explore Shanxi's Linxing block. The licence, issued in 2012, was extended for two years from last February to February 2022.

The 774 square-kilometre Linxing block holds an estimated 100 Bcm of tight gas in place, with potential for annual production capacity of 1 Bcm.

Block development plans

CNOOC Ltd has rolled out an overall development plan for the block focusing on a gas-prone area covering 674 square kilometres, where 72.5 Bcm of gas reserves have been confirmed as recoverable.

Under the plan, it will tap 40.2 Bcm of tight gas reserves in the area to establish an annual production capacity of 1.36 Bcm over seven years at a cost of 7.5 billion yuan ($1.15 billion).

Plans call for the building of 191 well pads, including 49 already built, to drill 706 wells. Of these wells, 45 have already drilled.

Offsite facilities will include five gas-gathering centres — one of which has been built — and 331 kilometres of pipelines to link well pads and gas-gathering centres, in addition to an export pipeline spanning 46.9 kilometres, of which 15.8 kilometres is already built.

Gas will initially be piped for consumption in Shanxi. It will later be sent to markets in neighbouring Hebei province.

CNOOC Ltd, via CUCBM, is already producing CMB in Shanxi at a rate of 10 million cubic metres per day.

Shale

CNOOC Ltd sets sights on China's onshore unconventional gas potential