Oil supermajor Shell has signed an agreement with China’s Sinopec to jointly study the potential development of shale oil in eastern China—one of the few international majors venturing into the potentially vast but underexplored and underdeveloped Chinese shale oil resources.
Shell and Sinopec will jointly study the potential of the Dongying trough in the eastern Chinese province of Shandong, Reuters reports, citing a brief statement from the Chinese company.
Shell operates in shale oil and gas projects in North and South America, including in the Permian and in the Appalachia basin, in Alberta and British Columbia in Canada, and in Argentina’s Vaca Muerta shale basin.
China, for its part, aims to develop its unconventional resources as its appetite for crude oil and natural gas continues to rise, while current domestic production can’t meet growing demand.
Over the past year, China’s biggest energy producers have started to tap more tight oil and gas wells, aiming to increase domestic oil and natural gas production at the world’s largest crude oil importer.
Earlier this year, China said that it had found massive shale oil reserves in its northern Tianjin municipality.
A PetroChina test oil well at a shale field in western China could finally mean a strong commercial potential for shale oil for the first time in the world’s top crude importer, Morgan Stanley said in February this year.
The shale boom in China, however, would be just a fraction of the U.S. shale revolution—Morgan Stanley expects Chinese shale oil production could be at 100,000 bpd-200,000 bpd by 2025, which is nothing compared to the millions of barrels of oil pumped in the United States every day.
According to an official at the Chinese Ministry of Natural Resources, quoted by Reuters this week, shale oil in China has very low permeability, meaning that production per well would be very low and the economics for production might not work.
By Tsvetana Paraskova for Oilprice.com
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