China’s biggest shale gas project, Fuling in the Chongqing region of the Sichuan Basin, has produced 20 bcm since entering production in late 2012 up to the start of October, operator Sinopec has said. But the national oil company (NOC) also disclosed that a second-phase development to increase production is encountering geological difficulties.
Daily output is now sufficient to supply 32 million homes “relieving pressure on natural gas supply from central and eastern China”, Sinopec said in a brief statement.
Both Sinopec and fellow NOC China National Petroleum Corp. (CNPC) are under pressure from Beijing to raise output to 30 bcm per year by the end of 2020. Last year’s combined shale gas production totalled about 9 bcm, with 6 bcm of this coming from Fuling.
However, Sinopec representatives at a shale gas industry conference in Shanghai in mid-October revealed that the second-phase development of Fuling to boost production was encountering unexpected geological challenges. Sinopec said it was seeking to overcome the difficulties by adapting its drilling technology.
The shale gas at Fuling is not only deep seated, with drilling to depths of over 3,000 metres, it is also fragmented and located in challenging mountainous terrain.
Sinopec’s Fuling expansion struggles coincide with a report that CNPC has contracted Chinese private firm Etrol Technologies to supply services for further development of the NOC’s Changning-Weiyuan project in Sichuan Province. CNPC has previously said it will boost production at Changning-Weiyuan to 5 bcm this year from 3 bcm last year.
Both Sinopec and CNPC recently urged the government to extend and expand state subsidies for shale gas and other unconventional gas development, saying it was often uneconomic to produce such gas commercially.