| | | Exploration & Production | |  | CNPC is engaged in hydrocarbon exploration and production operations in onshore and offshore areas in China and is authorized to cooperate with foreign oil companies to jointly explore and develop some blocks in China. CNPC's overseas exploration and production activities have expanded to 30 countries in Africa, Central Asia-Russia, South America, the Middle East and the Asia-Pacific. |
| | | | Oil & Gas Exploration
Our heavy investment in oil and gas exploration and our advanced geologic theories and technologies have resulted in successive major discoveries in the Songliao, Bohai Bay, Ordos, Tarim, Junggar, Qaidam, Sichuan, and Hailaer basins, adding more than 500 million tons to proven oil in place for seven consecutive year and 300 billion cubic meters to gas in place for six consecutive year. It is worth noting that CNPC's oil reserve replacement ratio continued to be over 100% for eight consecutive year.
In recent years, we have made many breakthroughs in the exploration of hydrocarbon-rich sags, marine-facies carbonate, large-area lithostratigraphic reservoirs, foreland basins and volcanic reservoirs. These have provided resource bases for the steady growth of our oil production and the rapid rise of our gas output. Integrated technologies and methods for the exploration of lithologic reservoirs based on high-resolution seismic and sequence stratigraphy have helped us find several 100 million-ton grade oil and gas fields in the deep zones of the Songliao Basin, Xifeng area in the Ordos Basin, Chuanzhong area in the Sichuan Basin and Tazhong area in the Tarim Basin.
In 2009, we made discoveries of strategic significance and important breakthroughs in domestic exploration, adding proven oil in place of 630 million tons and proven gas in place of 461.60 billion cubic meters. Among these, we identified two oilfields with the proven reserve volume of more than 100 million metric tons and three gas fields with reserves of more than 100 billion cubic meters.
Development and Production
Our crude production is continuing its sustainable and stable growth, thanks to the great efforts in improving development performance and enhancing the recovery efficiency of mature oilfields, as well as accelerating productivity construction in new blocks. The booming development and production of natural gas has led to a rapid growth of gas output at a double-digit increase year-on-year.
In 2010, CNPC produced 141.44 million tons of crude oil and 82.91 billion cubic meters of natural gas, including 36.03 million tons and 10.38 billion cubic meters from overseas projects.
The company has conducted 23 major trial development projects since 2005 to address the challenges in efficient development of high water-cut, ultra-low permeability and ultra heavy oil reservoirs. By the end of 2009, favorable results were achieved, as evidenced by average daily output per individual well increased by 160% from 1.6 to 4.2 metric tons. The best practices gained from these 23 trial development projects are expected to account for 5.60 billion metric tons of oil in place and help to recover an additional 780 million metric tons, enhancing the recovery efficiency by 14 percentage points.
In 2010, we strived to make technological breakthrough in the development of specified reservoirs characterized by high water cut, low-permeability, heavy oil and tidal zone, and launched a series of pilot tests. The pilot test for the development of Changqing’s 0.3 mD reservoirs was successful, which promoted the economical and efficient development of ultra-low permeability reservoirs. The binary flooding test was expected to enhance oil recovery by 15%. We also achieved preliminary results in pilot fire flooding for heavy oil development. In Jilin Oilfield, we further expanded the scale of CO2 flooding test, producing 1.53 million metric tons of crude last year. CO2 flooding is expected to be a leading technology in developing low-permeability reservoirs.
A series of leading technologies have been developed in terms of EOR by polymer and ASP flooding, recovery of mid-deep heavy oil and the development of low or extra-low permeability reservoirs.
 EOR by polymer flooding has been put into industrial application in CNPC's mature field development. Polymer flooding can yield a significant increase in oil recovery, generally over 10%, when compared with conventional water flooding techniques. CNPC can produce more than 10 million tons of crude every year by polymer flooding. ASP flooding is in the commercial test period and oil recovery efficiency can be 20% higher than by water flooding.
Pilot tests for heavy oil Steam Assisted Gravity Drainage (SAGD) development with combined vertical-horizontal wells have proved successful and been put into commercial application. By using this technology, an additional 30% of oil recovery can be achieved on the basis of huff and puff, enhancing the ultimate recovery efficiency up to 60%.
In 2009, Steam flooding was applied to 150 well groups at Block Qi-40 in Liaohe, making the field CNPC's first one that being developed by steam flooding at an industrial scale. Block Shu-1 already has 49 SAGD well groups entering the stage of industrialized development, producing 1,370 metric tons of oil a day.
A SAGD pilot area at Block 37 in Xinjiang Oilfield went on stream, with four pairs of horizontal wells starting to produce heavy oil. By applying matching development technologies for heavy oil reservoirs, the producible reserves of ultra heavy oil at Fengcheng Oilfield in Xinjiang is expected to increase from 135 million metric tons to 293 million metric tons, and the recoverable reserves could increase from 31 million metric tons to 118 million metric tons.
Low permeability oil and gas fields with permeability over 0.5md have been explored and developed in an economical and effective way. Great progress has been achieved in the pilot development of reservoirs with permeability of 0.3md.
In 2008, Changqing's extremely low permeability reservoirs yielded an output of two million metric tons, accounting for 50% of the field’s newly built production capacity in the year.
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