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Tapping the Potentials of Mature Oilfields——CNPC's Practices in China's Eastern Oilfields

Keynote Address at CERAWEEK 2007, Houston, Texas
Presentation by Xu Wenrong, Assistant President
February 13, 2007

Honorable Mr. Chairman, Ladies and Gentlemen,

Good Morning!

It is a great honor for me to join all of you today for this grand event. I would like to thank CERA first, for the kind invitation and presentation arrangement to me. My 10 minutes briefing will focus on how to tap the potentials of mature oilfields, and mainly on CNPC's EOR technology application in China's eastern oilfields.

As you know, the world petroleum industry has about 150-years development history, and it is increasingly difficult for us to find new and giant oilfields. Today, around 70% of world oil production comes from those mature oilfields which have been producing for over 30 years. In this context, how to improve the recovery of mature oilfields becomes a major issue for the industry. I am very pleased to share with you about my company's practices and experiences in tapping potentials of mature oilfields in eastern China.

The discovery of Daqing oilfield in 1959 led to the 20 years rapid development of China's petroleum industry. In this period of time, Shengli, Dagang, Jianghan, Jilin, Changqing, Liaohe, Huabei and Zhongyuan got discovered and developed one after another. In 1978, China's annual crude oil production exceeded 100 million tons for the first time.

CNPC is both a major oil producer and supplier in China, and holds majority of China's onshore oilfields. Most of them locate in eastern part of the country.

Daqing, Liaohe, Dagang, Huabei, Jilin and Jidong, CNPC's major oilfields in eastern China, have been producing over 30 years, and still remain as the dominant contributors to the company with about 70% of oil production. But these mature oilfields now are facing with high water cut problem, averagely around 87.4%. Their natural decline rate reached 11.3%. Application of appropriate technologies throughout the fields has improved production efficiency. As a result, the average recovery factor increased to 37.7% and the actual decline rate down to 5.4%. In particular, Daqing's average recovery factor reaches as high as 47.2%.

We are confident of being able to extend the stable production life of those mature oilfields till 70% plus recovery factor by using our existing technologies.

Over the years, CNPC has given great efforts on tapping potentials of mature oilfields. Technologies and experiences related to different types of reservoirs have been developed and integrated. These technologies include but not limited to : water control and oil stabilization in high water cut reservoir, EOR, SAGD, earlier water flooding and separate production in multi-layer heterogeneous sandstone payzone, progressive exploration and development of complex fault-block reservoir, low permeability reservoir and fractured reservoir development technologies.

Control of water and stabilization of oil production is a kind of technology referring to the special characteristic of high water-cut of mature oilfields in eastern China.

Polymer flooding, one of the major EOR technologies, started to be applied in Daqing in 1996. Its successful application brought this oilfield an annual EOR production above 10 million tons for 4 consecutive years. In addition to polymer flooding, more than 20 kinds of technologies related to reservoir engineering, production process and gathering systems have been developed and applied.

The development of Daqing is the most successful case so far in China, or even in the world. Its success is mainly subject to the application of technologies including large-scale heterogeneous sandstone payzone development, separate layer development, water control and oil stabilization as well as EOR. Oil production of Daqing has maintained at an annual production rate of 50 million tons for 27 consecutive years, which is deemed as a miracle in the world petroleum industry.

Cyclic steam stimulation is another key technology used in developing CNPC's heavy oilfields, mainly in Liaohe, which includes insulated steam injection, high temperature lifting, borehole vis-breaking, separate layer steam injection, gas and chemicals assisted huff and puff, multi-well integral huff and puff technology.

The application of those technologies is very effective in Liaohe. In 2006, the OOIP of Liaohe's heavy oil reached 810 million tons. 7.47 million tons of heavy oil produced from 10,000 wells. There are averagely 10 puff and huff cycles with an average oil to steam ratio of 0.37.

Application of EOR technology has helped us with the increase of oil production. Since 1996, incremental oil production by EOR has been added year by year. In 2000, incremental oil by EOR exceeded 10 million tons for the first time. In 2005, EOR production accounted for 12.5% of CNPC total oil production.

In recent years, the above mentioned technologies have been applied in our overseas projects with sound effect. In Peru, fine reservoir description solutions and enhanced oil recovery technologies brought a new life to a 120-year-old oilfield with the discovery of a number of high-yielding wells. The daily output rose from the original 600 barrels to 7,000 barrels. In Venezuela, enhanced oil recovery technologies stimulated the daily output of Intercampo and Caracoles from the initial 4,905 barrels to 40,000 barrels.

Great potentials lie in the world mature oilfields, and I believe they will continue to play an important role in the world petroleum industry. The world average recovery factor is only around 35%-37%, which means additional 63%-65% reserves still remaining subsurface. Suppose recovery factor rises 2% worldwide, recoverable reserves could be added 54 billion barrels; Suppose 2% down of decline rate of mature oilfields could be reached, 430 million barrels of oil production could be increased.

CNPC would like to share our technologies and experiences with you, to improve production efficiency of mature oilfields and make greater contribution to the security supply of world energy.

Thank you for your attention!

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