CNPC finds shale oil at Dagang prospect

06 March 2019, Week 09, Issue 446

China National Petroleum Corp. (CNPC) is planning to develop newly discovered shale oil reserves in northern China.

Dagang Oilfield, a subsidiary of CNPC, reported on February 27 that two wells had been flowing at a daily rate of 20-30 cubic metres for over 260 days. Total shale oil reserves at the field are estimated at 100 million tonnes (733 million barrels). 

CNPC believes that these reserves will support the development of a commercial shale oil industry in China, helping the country to meet its energy security goals and spur economic development. 

The announcement comes off the back of an even larger shale oil discovery at the Jimsar oilfield, in the country’s western Xinjiang Province. Earlier in February, PetroChina – CNPC’s listed arm – achieved a production rate of 100 tonnes per day (733 bpd) of tight oil from the Jimsar deposit. The result prompted renewed optimism over the country’s unconventional oil potential. 

China has around 4.5 billion tonnes (33 billion barrels) of technically recoverable shale oil, according to the International Energy Agency (IEA). If this is accurate, that would make it home to the world’s third largest recoverable shale oil reserves, behind Russia and the US. 

However, Chinese production has been miniscule to date. While the US is currently estimated to be producing around 8 million bpd of tight oil from shale formations, China’s output is only predicted to reach 100,000-200,000 bpd by 2025 at the earliest. 

Shale oil development on a commercial scale would support Chinese President Xi Jinping’s continued calls for greater energy security. After overtaking the US to become the world’s largest oil importer in 2017, China’s November oil imports surged to a record high of 9.61 million bpd. 

CNPC has said that shale oil growth will be focused in the Songliao, Ordos, Junggar and Bohai Bay basins, with the Dagang field located in the latter. Target production at the Bohai Bay Basin is 50,000 tonnes (366,500 barrels) of shale oil by the end of this year.


Edited by

Anna Kachkova


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