China announced on Wednesday the discovery of a major shale oilfield in the Daqing Oilfield cluster with expected reserves of 1.27 billion tons of oil, Chinese Xinhua news agency reported.
Daqing Oilfield is one of China's major onshore production centers, and the new discovery is expected to help it boost its oil production in the coming years, according to Xinhua.
Daqing Oilfield, which saw the first exploration for shale oil in the 1980s, now has more than 40 wells producing crude.
China National Petroleum Corporation (CNPC) aims to boost shale oil production from shale formations in Daqing to reverse the decline in the production in the area, the state-held oil giant said on Wednesday, as carried by Reuters.
CNPC has increased efforts to research and drill for shale oil in the Songliao basin where Daqing is located. The company has identified shale oil bearing zones in the Gulong formation, CNPC told a media briefing carried by local television.
"The Gulong shale oil campaign helps to cement Daqing's position as China's largest onshore oilfield as it struggles to replace reserves ... it contributes to ensure national oil supply security," said Fang Qing, general manager of Daqing oilfield, as carried by Reuters.
Chinese oil giants are ramping up exploration for shale oil and gas as part of a mandate from authorities to raise domestic production, which could diminish China's costly dependence on crude oil and natural gas imports.
Yet, China has struggled to develop its huge shale gas and oil resources. The challenges arise because some of the most prolific basins are twice as deep underground as the shale gas resources in some of the most extensive U.S. shale gas plays. The challenging geology leads to higher well drilling and completion costs, lower margins for exploration and production companies, and, at times, mixed results in gas flows.
By Tsvetana Paraskova for Oilprice.com
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Daqing oilfield has been depleting fast so the new discovery of 1.27 billion tons (12.461 billion barrels) is expected not only to reverse its production decline but will also raise China’s oil reserves from 25.9 bb currently to 38.36 bb once the new discovery has been proven.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London