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China Claims First Offshore Shale Oil And Gas Discovery

In a first for Chinese offshore shale, state-run oil giant CNOOC has announced what it claims to be a commercial discovery in the Beibu Gulf in the South China Sea with the tapping of oil and gas flows at a wildcat well. 

The discovery, at the Weiye 1 wildcat well, the first shale well China has ever drilled offshore, could be a game-changer for the country’s dependence on oil and gas imports, according to Chinese media

CNOOC estimates that the Beibu gulf holds some 8.76 billion barrels of shale oil in place, and Thursday’s announcement claimed that the wildcat well flowed 20 cubic meters/day of shale oil and 1,589 cubic meters/day of natural gas, which the Chinese oil giant is referring to as a commercial discovery. 

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Speaking to the Global Times about the discovery, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, questioned the next steps, including what he referred to as the “technical difficulty of shale oil extraction” and the high costs of production. 

While China is thought to have more than 30 trillion cubic meters of recoverable shale gas, it has struggled with development–all of which has been onshore to date. 

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According to Wood Mackenzie, unconventional oil production accounts for less than 1% of China’s total crude oil output due to “high breakevens and non-commercial economics”, but the country’s NOCs are spending top dollar to develop new technologies to ensure feasibility. 

That technological development so far is being heralded by CNOOC as the impetus behind the country’s first-ever offshore shale discovery. 

In a note originally published by Thepaper.cn and translated by the Global Times, the head of CNOOC’s exploration department said the success of the first offshore shale oil drilling marked the realization of the independent exploration and development of China's offshore shale oil and gas resources with self-developed technology.

By Charles Kennedy for Oilprice.com

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