Unconventional Oil & Gas Resources

Unconventional oil and gas resources mainly refer to CBM, oil sands, oil shale, shale gas and combustible ice. We are actively promoting the mass development of CBM and resources evaluation of oil shale, oil sands and shale gas, etc.

CBM

CNPC set up a CBM Lab in 1989 for research purposes. An overall evaluation of China's CBM resources started in 1992. We have selected Qinshui Basin, Ordos Basin, Junggar Basin and Erlian Basin as the prospective regions to look for "sweet spots" of CBM in the coal-enriched shallow and middle layers. CNPC's CBM development in the Qinshui Basin of Shanxi Province has already taken shape.

Qinshui Basin in Shanxi Province is known as one of world's largest high-coal-rank CBM reservoirs and the only proven uncompartmentalized CBM reservoir in China, with proven CBM in place up to 75.4 billion cubic meters, of which CNPC's share is 35.2 billion cubic meters.

CNPC has been engaged in the CBM project in Qinshui Basin since 1994. In 1997, well Jinshi-1 in the southern Qinshui Basin was completed with a daily gas flow of over 2,700 cubic meters. Shortly after that, a high-coal-rank CBM field was discovered in southern Qinshui Basin based on the exploratory results of several CBM exploration wells.

Our CBM development in the Qinshui Basin is primarily concentrated on the Zhengzhuang and Fanzhuang blocks. Following a production pilot test officially launched in 2006 by drilling 230 CBM development wells (55 of which have been put into operation), the CBM output per single-well exceeded 2,000 cubic meters per day on average in 2007, with a total CBM productivity of 330 million cubic meters. In particular, 10 multilateral horizontal wells were drilled with a total footage of 50,000 meters in the Fanzhuang block, bringing an additional productivity of 180 million cubic meters. An additional proven CBM reservoir with a gas-bearing area of 74.14 square kilometers was discovered in the Zhengzhuang block, increasing the in place reserves by 10.721 billion cubic meters.

On July 7, 2007, CNPC and Shanxi Energy Industries Group signed an agreement on the collaborative development of CBM regarding resource blocks and gas source supply in the Qinshui Basin, including CBM surface recovery projects and liquefaction projects.

On November 16, 2009, a CBM field located in Qinshui Basin of Shanxi Province became commercially operational. The first-phase demonstration project started its operations, with a daily output of 600,000 cubic meters. This is connected to the trunk pipeline of the West-East Gas Pipeline after being processed. Throughout the year, our commercial output of CBM reached 65 million cubic meters.

Following the successful commercial operation of CBM development in the Qinshui Basin, we began to build 500 million cubic meters of CBM production capacity per annum in eastern Erdos.

In 2010, our newly proven CBM reserves — mainly in the Qinshui Basin and the eastern edge of the Ordos Basin — exceeded 100 billion cubic meters for this first time in history. By widely using fishbone horizontal drilling and extracting gas by water drainage, we effectively solved the key technological challenges to CBM development. In Qinshui of Shanxi and Hancheng of Shaanxi, we established two digitalized and sizeable CBM fields with an annual production capacity of 1.3 billion cubic meters. In 2010, our annual CBM production was 280 million cubic meters. The Fanzhuang Block in Qinshui Basin started external transmission of CBM with a daily rate of 1.3 million cubic meters.

Oil shale

CNPC's oil shale exploration activities are mainly carried out in sedimentary basins such as the northern part of Songliao Basin, Liushuhe Basin and Yin'e Basin. The activities have produced positive results on different levels. The oil shale in the northern part of Songliao Basin is found to be 5 meters thick on average with a maximum layer thickness of 24 meters and an average oil content of 7%.

Shale gas

On November 10, 2009, CNPC and Shell signed an agreement to jointly assess shale gas resources at Fushun-Yongchuan Block in Sichuan Basin. This is the first shale gas cooperation project in China, and now implemented smoothly. The first exploration well was expected to be drilled in September 2010.

In 2010, CNPC launched shale gas pilot development at two blocks in Weiyuan-Changning in Sichuan Province and Zhaotong in Yunnan Province. The first shale gas appraisal well Wei-201 was completed in the south of the Sichuan Basin. Commercial gas flows were obtained from two series of shale strata of Cambrian and Silurian systems after fracturing.