CNOOC taps oil, gas from China's first offshore shale oil well

CNOOC has successfully tapped oil and gas from the country's first shale oil well offshore, signaling a breakthrough in China's offshore shale drilling to increase upstream reserve and sustain production, the state-owned offshore giant said in a statement July 28.

The development comes at a time when Beijing is laying increased emphasizes on energy security, as the country imports more than 70% of its crude supplies and about 40% of natural gas.

On July 24, the National Energy Administration asked state-owned producers PetroChina, Sinopec and CNOOC to increase focus on domestic upstream exploration and development. The administration set shale oil and gas as the strategic successor of the conventional barrels to accelerate unconventional resources development.

Located at the southwestern trough of the Beibuwan Basin in the South China Sea, CNOOC's exploration well Weiye-1 tested a daily production of 20 cubic meters (126 barrels) of crude oil and 1.589 cu m of gas.

CNOOC estimated that the shale oil resources in the entire Beibuwan Basin are about 1.2 billion mt (8.8 billion barrels), suggesting good exploration prospects.

The oil giant started to layout offshore shale oil exploration in 2020 and set the southwestern trough of the Beibuwan Basin as a strategic breakthrough in 2021.

CNOOC will set it as a new start point to accelerate building China's offshore demonstration shale oil project to ensure the country's energy supply, the company said.

Sinopec's shale development in Jiangsu

Meanwhile, Sinopec said earlier this month that it has tapped 30 mt/day (220 b/d) of shale oil and 1,500 cu m of shale gas from an exploration well Hua-2-ce in its onshore mature Jiangsu oilfield.

The flows unlocked 1.1 billion mt of prospective shale oil resources in the Subei basin, Sinopec said.

The company to it a pilot shale oil production project and speed up construction, it said.

China is rich in shale reserves, mainly located in southwestern Chongqing and Sichuan region, northern Inner Mongolia, and northwestern Xinjiang, with projects in the mature blocks including Daqing, Changqing and Shengli.

But shale production remains low due to geographic difficulties in development. China's shale oil production merely stood at 35,000 b/d around late-2021, market sources said. In comparison, the country's total crude production hit a 6.5-year high of 4.2 million b/d in June, the official data showed.