China announces major shale oil discovery

China on Wednesday announced the discovery of a large oil shale field in the Daqing Oilfield cluster with expected reserves of 1.27 billion tons of oil, China’s Xinhua news agency reported.

Daqing Oilfield is one of China’s major onshore production centers and the new discovery is expected to help ramp up oil production in the coming years, Xinhua said.

Daqing Oilfield, where the first exploration for shale oil took place in the 1980s, now has more than 40 wells producing crude oil.

China National Petroleum Corporation (CNPC) aims to boost production of shale oil from Daqing shale formations to reverse the decline in production in the area, the state oil giant said Wednesday. Reuters.

CNPC has stepped up its efforts to explore and drill shale oil in the Songliao basin where Daqing is located. The company has identified shale oil-bearing zones in the Gulong Formation, CNPC told a local television media briefing.

“The Gulong oil shale campaign is helping to bolster Daqing’s position as China’s largest onshore oil field as it struggles to replace reserves…it helps ensure national oil supply security,” said Fang Qing , general manager of Daqing oilfield, as reported by Reuters.

Chinese oil giants are ramping up exploration for shale oil and gas as part of a mandate from the authorities to increase domestic production, which could reduce China’s costly reliance on crude oil and natural gas imports.

Anyway, China has trouble developing its huge shale gas and oil reserves. The challenges arise because some of the most productive basins are twice as deep underground as the shale gas wells in some of the most extensive U.S. shale gas production. The challenging geology leads to higher drilling and completion costs, lower margins for exploration and production companies and sometimes mixed results in gas streams.

By Tsvetana Paraskova for Oilprice.com

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