PetroChina is moving ahead with plans to develop shale oil in northern China as part of what the company is calling a shale oil revolution, writes Xu Yihe.

The company is pinning its hopes on the Guandong prospect in the eastern Dagang oilfield to produce 700,000 tonnes of shale oil (14,000 barrels per day) by 2025, up from about 5 tonnes expected this year.

Dagang officials said that the shale oil production target in 2025 will require investment of up to 4 billion yuan ($570 million), part of which will go to drill 380 horizontal wells.

Of the total wells to be drilled, 59 will be drilled within the next couple of months, with 15 already having been completed and another 11 being drilled.

They said that to produce 700,000 tonnes of shale oil will involve tapping 200 million tonnes of reserves for an annual production capacity of 1 million tonnes.

The two discovery wells at Guandong, Guandong 1701H and Guandong 172H, have flowed continuously for 260 days at between 18 and 27 tonnes per day.

The Guandong 1701H probe was completed in November 2017 at a depth of 5465 metres with a horizontal section totaling 1465 metres.

A second well was completed in December 2017 to a depth of 5280 metres with a horizontal extension of 1840 metres.

Since 2013, PetroChina has drilled 15 vertical shale oil wells at the Dagang oilfield, which is located at Bohai Bay, all of which have flowed shale oil of what the company refers to as industrial value.

Dagang is one of the three areas listed by PetroChina for future shale oil development. The other two areas are Karamay and Tuha in Xinjiang.

Dagang is a mature field, having been producing since 1964. PetroChina plans to increase its production to 5 million tonnes per annum by 2022, up from 4.2 million tonnes expected this year.

PetroChina said China has shale oil potential of 5 billion tonnes, ranking third in the world for resources after Russia and the US, while the Paris-based International Energy Agency has pegged the reserves at a slightly lower volume of 4.4 billion tonnes.

PetroChina vice president Jiao Fangzhen has urged bold moves for what he calls the large-scale development of shale oil.

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

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Guandong prospect in focus for Chinese shale oil drive