China Shale Gas: CNPC Seeks To Double Sichuan Output By 2025

The country’s largest producer of oil and gas is leading the charge to create a domestic shale boom.

A worker sweeps the floor at a natural gas processing facility in China. Source: Getty Images

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China National Petroleum Corp. (CNPC) announced plans to increase production from its emerging gas projects in the Sichuan province to 50 BCM by 2025. In 2018, the field produced around 22.6 BCM and the 2020 goal is 30 BCM, according to Reuters, which cited company statements.

CNPC is the largest producer of oil and gas in China and has been tapped by the government to lead the country toward its own shale revolution. The company reported last month that its domestic gas production increased by 10% year-over-year—the first time it has posted a double-digit rise. CNPC is responsible for 70% of China’s total gas output.

A smaller gain of 1.4% occurred on the oil side of the business, marking the first uplift in production CNPC has recorded in 4 years. However, as the country moves away from coal-fired power plants to improve air quality, boosting natural gas production is the priority.

To meet its goals, CNPC said it will invest more in technology that can improve the output of older gas wells and will drill into deeper horizons. Reuters reports that CNPC and the country’s other state-owned operators plan to increase drilling budgets to their highest levels since 2016.

Domestic efforts to rapidly increase production have been met with challenges in the subsurface. Unlike many of the large gas plays in the US, the tight-gas targets in China involve challenging and complex geologies. This has spurred the rapid uptake of technologies that include rotary steerable systems and geosteering—two innovations that have only recently been widely adopted in more mature North American shale plays.

The US Energy Information Administration estimates China’s recoverable shale gas reserves at 1.115 TCF—the world’s largest.