China’s state-owned oil company CNOOC has tapped commercial oil and gas flows from a shale exploration well in the South China Sea, marking the first successfully drilled shale oil well offshore China on 28 July.
According to Chinese state media, the discovery at the Weiye 1 wildcat well, China’s first offshore shale well, might be a game changer for the country’s reliance on oil and gas imports.
CNOOC believes that the Beibu gulf contains 8.76 billion barrels of shale oil, and claimed that the wildcat well flowed 20 cubic metres/day (m³/d) of shale oil and 1,589m³/d of natural gas, which the Chinese oil giant is calling a commercial discovery.
In an interview with the Global Times, Lin Boqiang, head of the China Center for Energy Economics Research at Xiamen University, doubted the next steps, citing the ‘technical difficulty of shale oil extraction’ and the high production costs.
While China is expected to have more than 30 trillion cubic metres of viable shale gas, development has proven difficult, all of which has been onshore thus far.
Due to ‘high breakevens and non-commercial economics’, unconventional oil production accounts for less than 1% of China’s total crude oil output according to Wood Mackenzie, but the country’s NOCs are spending large amounts of money to research new technologies to ensure practicality.
CNOOC is hailing this technological advancement as the reason behind the country’s first-ever offshore shale discovery.
The head of CNOOC’s exploration department said in a note published by The Paper, and translated by the Global Times, that the success of the first offshore shale oil drilling marked the realisation of independent exploration and development of China’s offshore shale oil and gas resources using self-developed technology.
In response to a central government request to increase domestic energy supply security, national oil corporations are increasing their efforts to exploit shale reserves, despite geological hurdles and increased costs.