Sichuan Basin Shale Gas, China: Exploring the Lower Silurian Longmaxi Shale

Abstract

Introduction The Peoples Republic of China (PRC) has set ambitious targets to increase its domestic supply of clean-burning natural gas. Shale gas is one of the hottest exploration concepts in the global E&P industry, and according to press releases 2010–2011:• In 2010, the PRC Ministry of Land and Resources (MLR) set a target for the country to identify 50–80 shale gas prospects and 20–30 exploration and development blocks by 2020.• The Strategic Research Centre for Oil and Gas of MLR also set a goal to locate one trillion cubic metres of recoverable shale gas reserves, build 15–30 billion cubic metres of production capacity and produce 8–12 percent of China's natural gas from shale gas wells by 2020.• China National Petroleum Corporation (CNPC) announced a new shale gas research center. The center will focus on technology and equipment supporting shale gas exploration and development.• China and the United States announced the two nations would cooperate in several energy areas including shale gas development.• In addition to shale exploration already underway for own account, PetroChina signed an agreement for shale assessment with Royal Dutch Shell in November 2009 and Sinopec signed an agreement with Exxon Mobil in July 2011, for blocks in Sichuan Province and/or Chongqing Municipality.• In June 2011, auction tender results for four shale gas exploration blocks in Chongqing Municipality and Guizhou Province were announced. When the tender was originally announced in 2010, it was said that the successful Chinese companies would be able to form joint ventures with foreign partners to carry out the assessment if they so chose. Shale gas exploration in China is already underway and rapidly increasing in activity level. The Sichuan Basin, one of the most prolific petroleum basins in China, is at the forefront. However, exploration and assessment of an untested shale gas play is typically lengthy and expensive. Compared to conventional oil and gas projects, shale gas projects may require a number of early wells to prove the existence and distribution of the gas, but then many more to test and optimize engineering techniques until a commercially viable combination is found. This process could be summarized into two over-arching questions: "Is there a material amount of gas?" and if yes, "Can it be produced economically?"