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China Continues String Of Discoveries With Giant New Gas Field

China’s state-run CNOOC oil and gas giant has announced the discovery of what Chinese media are referring to as a large, deep-reservoir coalbed methane field with proven geological reserves of over 100 billion cubic meters (bcm) of natural gas. A discovery of this magnitude represents CNOOC’s second major onshore gas discovery, which is being heralded as a major step towards expanding China’s unconventional production. 

The discovery also represents the country's first deep coalbed methane field. The Shenfu coal seam gas field discovery is in the country’s north, at Yulin, with the coal seams at a depth of around 2,000 meters. Test production saw the well produce 19,000 cubic meters of gas per day, according to Chinese media, and CNOOC is planning over 100 wells in the field. 

In July, China claimed its first offshore shale discovery by CNOOC in the Beibu Gulf in the South China Sea at a wildcat well. The Weiye 1 wildcat well is estimated to hold some 8.76 billion barrels of shale oil in place. 

A month later, China’s state-run Sinopec announced the discovery of a massive oilfield in the Tarim Basin, containing 1.7 billion tons of oil reserves and said to be one of the deepest commercial fields in the world. Discoveries have been lining up over the past 24 months, and the newest gas discovery this week comes as Chinese refiners are said to be falling back on crude stockpiles, most recently in September. According to Reuters columnist Clyde Russell, refiners are tapping into stockpiles despite the fact that imports have dipped amid record processing volumes. Reuters noted China’s September crude imports were down over 10% from August, citing customs data. 

Russell reports Chinese refiners as drawing approximately 240,000 bpd from inventories in September (for the second time in three months), after adding to stockpiles in August and drawing from stockpiles in July. Both draws were responses to increasing domestic demand and increased volumes of exports, as well as rising crude oil prices. 

China’s crude imports dropped over 10% in September, compared to August, Reuters reported. 

“This means Chinese refiners have effectively been building a war chest of stored crude, allowing them to continue to run their plants at high rates while trimming crude oil imports,” Russell noted. 

By Charles Kennedy for Oilprice.com

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