China National Petroleum Corporation (CNPC) has embarked on a campaign to develop shale oil reserves trapped in deep reservoirs in China's remote north-west desert region of Xinjiang, where it aims to establish the country’s first commercial shale oil production in two years, writes Xu Yihe.

The company has mobilised 36 land rigs at the Jimusar shale oilfield, 150 kilometres north-east of the regional capital Urumqi, having started drilling 47 wells.

Another nine rigs will be mobilised in the second half of this year.

Of the 47 wells, eight have been completed.

CNPC’s Xinjiang outfit plans to frack 55 wells this year including those drilled last year.

A company plan calls for building a shale oil production capacity of 1 million tonnes (7.3 million barrels) per annum by 2021, up from the 300,000 tonnes targeted for this year.

The volume will be doubled to 2 million tonnes by 2025, which will be maintained for eight years.

The Paris-based International Energy Agency has pegged China’s shale oil reserves at 4.4 billion tonnes of technically proven recoverable.

The latest shale oil development in Jimusar comes as part of CNPC’s larger programme to boost oil and gas production in Xinjiang to 50 million tonnes of oil equivalent by 2020.

The Chinese government has long wanted to turn Xinjiang into a leading oil and gas production hub.

For that purpose, CNPC has earmarked 150 billion yuan in oil and gas exploration and development from 2018 to 2020.

The country’s largest oil producer sees its annual production stagnating at around 100 million tpa and it has trended down in recent years due to natural depletion.

The company, which has licences covering 80% of the country's oil and gas acreage, is desperate to reverse the sluggish onshore production and shale oil development will be pivotal to that effort.

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CNPC set to target Xinjiang