SINGAPORE (Reuters) - China’s national oil companies are raising spending on domestic oil and gas drilling to the highest levels since 2016, responding to Beijing’s call to boost national energy security.
Below lists key basins and blocks where China’s state energy giants are increasing drilling activities and discoveries, mostly of natural gas, according to company reports over the past few months.
CNPC announced in late 2018 an oil discovery at Mahu in the Junggar basin which has 400 million tonnes of oil in place, one of the largest oil finds onshore China in years. Roughly 100 million tonnes will be technically recoverable.
Mahu’s annual output will top 3 million tonnes per year in three years, a big addition to the 10-million tonne per year Xinjiang field.
Calling it a breakthrough in an earlier untapped region, PetroChina Co Ltd in late 2018 struck sizeable oil and gas flows in exploration well Zhongqiu-1 in the Tarim basin.
Zhongqiu-1 tested a daily natural gas flow of 330,000 cubic meters and condensate of 21.4 cubic meters. The well is located in the southern part of Kuche trough in the Tarim basin, part of a 5,200 square-km exploration zone.
CNPC struck daily gas flows of 225,000 cubic meters at exploration well Yongtan-1, in Sichuan province’s Jianyang city, the firm said in December, part of a 350 square-km gas-rich acreage of volcanic rock layers.
Production at CNPC’s flagship shale gas play Chuannan in Southern Sichuan hit a daily record of 20.11 million cubic meters in late December, up from 12 million cubic meters in October.
Total 2018 output in Chuannan was around 4.1 billion cubic meters (bcm), 37 percent above 2017.
A total of 143 drilling rigs were deployed in 2018 to produce gas at Chuannan, more than triple year-earlier levels. CNPC is aiming to raise the annual production capacity at Chuannan to 12 bcm by 2020.
CNPC struck high volumes of gas flows at four exploration wells at Dagang, near Beijing, that could lead to a sizeable gas field called Lianhua.
The Yinggu-2 well in Dagang yielded nearly 180,000 cubic meters of gas and 234,000 cubic meters of condensate a day while Ying-101x1 tapped daily flows of 74,000 cubic meters of gas and condensate of 318,000 cubic meters, CNPC said in January.
Largely a tight oil and gas play with low permeability and low per-well production, CNPC has over the last two decades built Changqing, in north China’s Ordos basin, into the country’s largest oil and gas producing field. Output hit a record 54.61 million tonnes of oil equivalent in 2018, up 2.7 percent from 2017.
In gas development, CNPC added 2,300 new gas production wells in Yulin, Sulige and Jingbian blocks in 2018, raising output by 23 million cubic meters a day.
The increased drilling boosted Changqing’s total gas output to 38 bcm in 2018, a quarter of China’s total gas output, and compared to an earlier target of 36.8 bcm.
CNPC also stepping up drilling shallower wells at Changqing, where it struck in 2018 industrial oil flows at 184 wells and added 51.7 million tonnes of proven reserve.
A drilling unit under the Ministry of Land & Resources is conducting some early-stage drilling of shale formations in the western part of central Hubei province, which the ministry said could hold over 10 trillion cubic meters of geological reserves.
In December 2017, at exploration well Bozhong 19-6-1 in the Bohai Sea off north China, CNOOC tapped 348 meters of gas bearing deposit and 25 meters of oil-bearing structure, and tested daily gas flows of 6.4 million cubic feet.
Bozhong 29-6, also in the Bohai Sea, is an oil find with potentially 100 million tonnes of oil reserve in place. CNOOC completed eight appraisal wells by August 2018.
Lingshui 17-2, 150 km off China’s southernmost province of Hainan is CNOOC’s single-largest fully-owned deepwater find. CNOOC made final investment decision in March 2018 and total investment is estimated at 20 billion yuan ($2.98 billion).
The block, at an average water depth of 1,450 meters (4,750 feet), has recoverable reserves of 2.5 trillion cubic feet as estimated by analysts at Wood Mackenzie and IHS Markit.
Reporting by Chen Aizhu; Editing by Lincoln Feast