Development Status of Shale Gas in China

By Yue Laiqun

In 2015 the Ministry of Land and Resources reduced its estimate of the technically recoverable shale gas resources of China to 21 800 billion m3 and defined the proven geological reserves to be 544.129 billion m3.
In 2016 the proven reserves of shale gas in Sinopec Fuling Shale Gas Field were increased to around 400.0 billion m3, the gas-bearing area was expanded to around 400 km2 and the type of strata for development was determined to be mainly marine shale. The proven geological reserves of shale gas acquired by PetroChina in Changning, Weiyuan and Zhaotong were 163.531 billion m3 in a gas-bearing area of 207.87 km2. According to researchers, most of the unconventional natural gas found in Guizhou is either shale gas (13 540 billion m3) or coal-bed methane (3 150 billion m3).
In the “Program for the Development of Shale Gas (2016-2020)”, issued by the National Energy Administration on September 30, 2016, shale gas is regarded as a major clean source of energy and a basic sector. It is defined in the program that in the next five years China should improve technologies for the prospecting and development of marine shale gas at depths below 3 500 m (marine shale gas and continental/marine transitional shale gas). Great efforts will be made to achieve annual shale gas output of 30.0 billion m3 in 2020.
In 2016, China achieved breakthroughs in the development of shale gas mainly in Fuling and Changning-Weiyuan. The development of tight gas in places such as Erdos also saw major advances.

1. Shale gas development by Sinopec in places such as Fuling

In Fuling Shale Gas Field during 2016, the drilling of 40 wells was completed, the drilling of 18 other wells was started, gas tests were conducted in 70 wells and 66 wells were put on stream, an increase of 759.03% over the previous year. The average single-well daily output was 327 200 m2, the highest single-well daily output was 591 000 m2, the total daily output was nearly 14.00 million m3 and the total output was 2.5 billion m3. According to production/sales data released by the Production Control Center of Fuling Shale Gas Co., Ltd. on December 29, 2016, the amount of shale gas sold in Fuling Shale Gas Field was 4.8365 billion m3 in 2016, and output was 5.037 billion m3. It is estimated that the output of shale gas by the company for the whole year of 2016 was over 80% of the national total.
Fuling Shale Gas Field started second-phase construction at the beginning of 2016, and defined Jiangdong, Baitao, Pingqiao and Baima as major tracts in the second-phase producing region. Fuling Shale Gas Co., Ltd. has arranged 56 wells in Pingqiao Tract and 71 wells in Jiangdong Tract. The capacity of shale gas in the whole region has already reached 5.0 billion m3 today.
On October 5, 2016, flush testing of both Jiaoye 70-1HF well and Jiaoye 70-2HF well was completed, and both wells achieved daily output exceeding 200 000 m3. On October 28, 2016, drilling of well Jiaoye 184-2HF was completed, and it produced 458 000 m3 of high-yield commercial shale gas daily. The bright prospect of the second phase of development was further verified. Shale gas has already been transmitted to Central China and East China through pipelines.
Sinopec has also made advances in the development of shale gas in places outside the Sichuan Basin such as Pengshui. On November 29, 2016, Yongye stopped drilling 3-1HF well at a depth of 5 873m. Sinopec started drilling quite a few wells in places such as Weiyuan-Rongxian and Dingshan and obtained high-yield streams of shale gas. Sinopec has already obtained shale gas streams in the fracture testing of quite a few wells, including Dingye 2HF, Weiye 1HF, Yongye 1, Jiaoye 87-3HF and Jiaoye 69-2HF.

2. Shale gas development by PetroChina in places such as Changning and Weiyuan

PetroChina’s Yibin Changning-Weiyuan State-Class Shale Gas Industry Demonstration Zone was constructed in January 2016. In Changning 201-YS108 well block, the drilling of 67 wells was completed in 2016, the drilling of 61 wells was in progress at that time and average daily output there was 143 000 m3. In Weiyuan 202 well block, the drilling of 25 wells had been completed, the drilling of 14 wells was in progress and average daily output was 167 300 m3.
Changning-Weiyuan State-Class Shale Gas Industry Demonstration Zone has developed an annual capacity of 2.5 billion m3 today. The annual capacity of the whole region is over 3.0 billion m3.
A total of 100 shale gas wells in the demonstration zone are in production. Total daily output in 2016 was 7.24 million m3, and total annual output had reached 2.304 billion m3. When the output of shale gas in Yunnan, such as in Zhaotong, is added, the total output of the whole region was over 2.5 billion m3.
Shale gas successes in Changning-Weiyuan Demonstration Zone have greatly improved the region’s energy economy. More than 50 000 urban households in many places such as Yibin now use shale gas directly.
PetroChina has also obtained high-yield shale gas streams in Yang 101 well, Lai 101 well and Yang 201-H2 well located in the Fushun Yongchuan Tract.

3. Shale gas development by other units

The trend of shale gas development by China Geological Survey in the middle and upper reaches of the Yangtze River is sound. By October 2016 the drilling of the first horizontal shale gas well with a long horizontal section (Zhuoye 1HF well) was completed and a shale gas stream was obtained. In Guizhou, local governments have established two companies – Guizhou Qianneng Shale Gas Development Co., Ltd. and Guizhou Shale Gas Co., Ltd. – and effectively promoted appraisal and development of the area’s shale gas resources. On July 7, 2016, Anye 1 well in Zhengan County of Zunyi yielded natural gas (shale gas) stream from four strata. Entrusted by the Ministry of Land and Resources, Guizhou Government prepared for public auction of extraction rights in Zhengan County Shale Gas Tract at the end of September 2016. In Hubei, the drilling of Yidi 2 well in Yichang encountered the Tianhe Plate and experienced a gas explosion. Shale with a thickness of 100 m was discovered in Niutitang Group of Zidi 1 well in Zigui County. Shale in Doushantuo Group had a thickness of 145 m; the amount of shale gas contained was 2-4 m3 per ton and successful degassing/burning off was conducted.
In central China, Weican 1 well was the first Upper Palaeozoic parametric well drilled by China Geological Survey in the Taikang Longqi of Henan. The average amount of shale gas contained is 4.5 m3 per ton. Muye 1 well was the first shale gas exploration well in Henan’s Zhongmu Tract; ten shale gas layers were discovered and the daily output in fracture testing was around 3 000 m3.
In Qinghai, Baye 1 well was drilled in the Babaoshan Basin of Dulan County, Qinghai province, in 2016. A shale gas stream was obtained in November 2016 when that well was drilled to a depth of 300 meters. The average amount of shale gas contained was estimated to be 5-15 m3 per ton. It is the first discovery of shale gas in the East Kunlun Orogenic Belt, and the scope of prospecting and developing shale gas has therefore been expanded in the area.

Technical advances

By 2016, China had already acquired the ability to drill and to stage fracturing in horizontal wells at a depth of below 3 500 m, had explored and implemented the operating mode of “well factories” and developed related equipment such as the 3000-model fracturing truck. A solid foundation is therefore laid for enhanced productivity in shale gas development.
Drilling equipment for directional wells is essential in extracting shale gas. The performance of tools for directional wells is improved by employing high-strength materials and upgrading design standards. Operation of directional wells has become simpler and more accurate. The supply of drilling equipment for directional wells had been basically localized in China by the end of 2016.
Exploitation of shale gas has proceeded through three stages – vertical wells, horizontal wells and clustered “well factories”. The drilling of several wells at the same time in a “well factory” mode can increase the speed of well completion and reduce the duration of drilling. In Fuling and Changning-Weiyuan shale gas development regions, ten wells at most could be drilled in a single well yard in 2016. The drilling duration for each well could be shortened by 3-4 days on average and fracturing operation could be conducted simultaneously in several wells.
Water-based drilling fluids for conventional horizontal wells are quite mature in China, but they still have limitations in wells with a long horizontal section. Therefore, China should focus on developing oil-based drilling fluids. The horizontal section of a shale gas well in Sichuan and Chongqing is usually around 1 500 m long. PetroChina has developed key technologies for improving the pore-plugging ability of drilling fluids and controlling the fluid loss. A stable flow of oil-based drilling fluids in shale strata is therefore possible. Oil-based drilling fluids produced in China were used in shale gas wells in 2016, and requirements for safe and rapid drilling were satisfied. By November 25, 2016, PetroChina’s Chuanqing had used domestic oil-based drilling fluid in drilling over 110 000 m in a state-class shale gas demonstration zone.
Slick-water fracturing fluid is one of the core technologies in the development of unconventional oil/gas around the world. High-effect drag reducer and slick-water fracturing fluid developed by CNPC Great Wall Drilling Co., Ltd. passed appraisal in July 2016 and can be used to replace imports. Drag reducers and slick-water fracturing fluids produced by China have greatly reduced the overall cost of fracturing.

Prospects

Domestic breakthroughs in the development of shale gas are typically first made in Sichuan and Chongqing. These breakthroughs have enabled progressive optimization of the supply side of the national energy economy. Methane gas is oversupplied in western regions such as Sichuan and Chongqing. The ability of transmitting the methane gas to economically advanced regions such as East China and South China is greatly enhanced. Not only is the consumption of coal in advanced regions thereby reduced, but the economic pressure to transmit more natural gas through the “west-east gas transmission” pipeline is also eased. Hence, optimization and development of the national energy economy is furthered, and industrial upgrades are accelerated in shale gas development regions.
In 2017, China will increase market-driven allocation of production factors in shale gas development, encourage market competition, promote construction of infrastructure employing multiple channels for projects such as shale gas pipeline networks, and gradually reduce shale gas development costs. Domestic development of shale gas will probably continue to make rapid headway in 2017 amid difficulties, and the constantly increasing supply of greener energy sources such as shale gas will sustain further adjustments and optimization of the national energy economy.