Shale Gas Exploration Relies Heavily on Key Technologies

By Xu Bo, CNPC Economic & Technology Research Institute

Shale gas's success in the United States has driven a global shale gas revolution. However, that success was based not only on government policy, but also on the maturation of technologies for horizontal drilling and fracturing. At present, a wave of shale gas exploration is surging across China along with several questions: how adequate is China's technical preparedness for developing shale gas and is current technology strong enough to act as wings for the domestic take-off of shale gas?

A. Key technical levels and equipment in China

Shale gas development in China is still in its initial stage, and one important reason is that although China has some basic individual technologies and equipment, a mature technology system for the exploration and development of shale gas has not formed here yet.

1. Horizontal drilling technologies

Currently, horizontal drilling technologies in China can meet the basic need of domestic oil-gas field development. However, these technologies are mostly based on tracking, introduction, digestion and absorption of foreign advanced technologies. Due to the lack of unique advanced technologies in China, both the hardware and the software of the field are controlled by foreign companies.
   It is true that breakthroughs have been made in several aspects of horizontal drilling technologies in China through years of technology import and re-innovation. For instance, CNPR Drilling Research Institute has developed the casing drilling technology in table drive rigs and carried out large-scale application in Jilin Oilfield. Also, significant progress has been made in the coiled tubing technology of horizontal wells, while the technology is still not applied in large-scale because related equipment and supporting technologies are underdeveloped.

2. Horizontal well completion technologies

After decades of development, horizontal wells have been successfully drilled to explore petroleum reserves in various lithologies in China. The diverse completion methods include combined control of water and gas cresting by gas and water production, selective well completion to control water cresting in perforated and open hole wells, intelligent water identification/plugging in horizontal wells and separated recovery, completion and equilibrium drainage techniques in horizontal wells.
   Multi-stage fracturing is one of the key supporting technologies for horizontal drilling. By using multi-stage fracturing, fracturing of multi-layer reservoirs can be completed once in a relatively short period of time; the damage to the reservoir can be minimized; multi-layers can be merged and the production per well can be increased; exploitation can be maximized. Currently, multi-stage fracturing technologies of horizontal wells used in oilfields include coiled tubing separate-layer fracturing technology, hydraulic sliding sleeve sand blower separate-layer fracturing technology, ball-injection sliding sleeve multi-stage fracturing technology and horizontal open hole multi-stage fracturing (including acid fracturing) technology.
   Overall, the technology level and equipment for horizontal well completion still needs to be improved in China in order to develop shale gas here. Major problems that need to be solved include how the horizontal well drain can be balanced and how development efficiency can be improved, and how to conduct multi-stage fracturing in low permeability sandstone petroleum reservoirs.

3. Fracturing equipments

In the 1980s, Sinopec SJ Petroleum Machinery Co. began to introduce design and manufacturing technologies, such as the fracturing pump (Model 1800) from OPI of the United States, high-pressure activities elbow from FMC Corporation, high-pressure manifolds from SPM Company and fracturing units from western companies. The company began to import assemblies of fracturing units in 1990. Therefore, the technical level of the fracturing equipment in China can keep up with that in developed countries.
   However, the development of fracturing equipment in China mainly depends on mapping and modelling of foreign mature products as a whole. There has been no fundamental breakthrough in the overall innovation of products, and there is not much independent intellectual property in China. Therefore, it will take a long time for China to design and manufacture fracturing equipment specialized for shale gas development.
   Meanwhile, innovations in the area of the fracturing process are needed in China more than ever. In conventional petroleum development, there are successful cases of multi-stage fracturing in China. The same technology is feasible for use in shale gas development. The repeated fracturing technology has been studied and applied extensively in China, and it can be used for reservoir reconstruction in the mid-to-late phase of a shale gas reservoir's development. Slickwater fracturing, on which more theoretical studies and practical applications have been carried out in China, is fully applicable to the development of shale gas.
   Since reform and opening up, China's petroleum equipment manufacturing industry has developed rapidly. Petroleum drilling equipment has not only met the needs of the domestic oil and gas exploration and development, but also made been exported in quantity to the United States, Europe and Central Asian countries. For example, as of the end of 2010, CNPC Baoji Oilfield Machinery Co., Ltd. had made over 900 pieces of land drilling rigs capable of wells deeper than 4,000 meters for domestic use, and had exported over 100 drilling rigs; Sinopec SJ Petroleum Machinery Co. undertook major S&T projects to develop fracturing units with the highest power in the world; drilling rigs made by Sichuan Honghua Petroleum Equipment Co., Ltd. have been successfully used for shale gas development in North American; the fracturing units manufactured by Yantai Jereh Oilfield Services Group have been used for the exploitation of shale gas in North America.

B. China's shale gas technology services companies


1. The three major petroleum companies

China's major petroleum technology services companies, such as CNPC BGP Inc., CNPC Greatwall Drilling Company, China Oilfield Services Limited, still belong to the three major state-owned oil and gas companies, namely PetroChina, Sinopec and CNOOC.

2. The development of shale gas can promote the formation of a group of independent petroleum services companies

Shale gas has been defined as an independent mineral resource, and a variety of domestic investors have begun to participate in the exploration and development of shale gas in China. These investors probably need to cooperate with state-owned petroleum companies at first, thus they can gradually master the technologies of petroleum exploration and development, establish their own personnel system, and then form unique technology service capabilities in shale gas development relying on their advantages such as flexible mechanisms and financial strength.
   Foreign petroleum companies and technology service companies are very actively participating in shale gas development in China. Large companies such as BP, Shell, Chevron, ConocoPhillips, Newfield Exploration, Baker Hughes and Halliburton have already entered the field. If the domestic shale gas development market was stimulated and became attractive enough, small and medium shale gas development and technology companies from the United States would also participate. Foreign companies may take advantage of the strengths of private capital, such as flexible mechanisms and ease of control, to transfer their petroleum industry services technologies to China. A group of strong technology services companies will likely be set up, and they can bring advanced and applicable technologies to support the shale gas development in China.