Changbei Tight Gas Project, Shaanxi, China

Changbei Tight Gas Project includes the development of the Changbei onshore gas field located in the province of Shaanxi in China. It is being jointly developed by Royal Dutch Shell and PetroChina under a product sharing agreement signed in 1999. Shell is the operator.

"As part of the agreement, Shell will develop natural gas resources present in the Jinqiu block in the province of Sichuan, China."

The project is the largest onshore venture between a Chinese entity and an international company. Although the presence of onshore gas was known, China did not have the technology to extract it.

Partnership with Shell has enabled PetroChina to extract the reserves and reduce costs with the use of advanced technology.

An investment of $1.3bn was made in the development of the project, which is spread over an area of 1,600 square kilometres. First production was achieved in March 2007. In 2011, the project achieved a record annual production rate of 3.5 billion cubic metres (bcm) of gas.

As of January 2012, the project has produced 18.33bcm since commencing production. Most of the natural gas is supplied to the cities of Beijing and Tianjin, as well as the Shandong and Hebei provinces.

Geology and reserves of Shell's Changbei onshore gas field

Changbei field was discovered in 1991. The field reservoir is of the Upper Paleozoic Lower Permian formation and is made of P1S2 sandstones. The thin and complex braided-channel sandstones are 15-35m thick.

The reservoir is located at a depth of 2,700-2,950m and is hydrostatically pressured. It has an average porosity of five percent and a permeability of 0.7-md.

Reserves are estimated at 96.1bcm of natural gas. Life of the field ends in 2025.

Development of Changbei in the province of Shaanxi in China

Historical exploration drilling was carried out after the field's discovery in 1991 and a total of 20 exploration wells were drilled. Trial production started in November 1999.

"Partnership with Shell has enabled PetroChina to extract the reserves and reduce costs with the use of advanced technology."

Tight gas reservoirs, such as the Changbei reservoir, hold gas reserves in minute pore spaces of rocks. The rocks need to be broken or fractured to recover natural gas.

Recovering gas from such reservoirs is economically challenging, as the volumes of gas recovered from each well are significantly smaller than conventional reservoirs. The advantage with tight gas reservoirs, however, is that hundreds of wells can be drilled to recover the reserves.

Based on the results of the historical drilling activities, a bilateral horizontal well development concept was chosen for the Changbei project. The wells feature 2,000m horizontal sections. Horizontal wells can provide higher productivity rates than the vertical wells.

Two appraisal wells were drilled to test the development concept. They indicated the advantages of using horizontal wells. The Changbei project holds the record for the longest horizontal section (2,251m) of multilateral wells for an onshore field in China.

Field development concept was optimised in 2004 and a final investment decision taken in April 2005.

Construction and infrastructure of the major Chinese onshore venture

Development of the project commenced in June 2005 with site works, drilling operations, construction of access roads and other infrastructure. The project included the construction of a new central processing facility (CPF).

Five wells were drilled between August 2005 and June 2007. The first horizontal well was put into production in 2006. The CPF was commissioned in November 2006.

By the time the project came into production, 26 wells were drilled and tested. Of these wells, 15 produced one million cubic metres a day initially.

The project currently includes more than 100 gas well heads. Three Series 7 rigs operate at the field.

Contractors involved with the Changbei Tight Gas Project

Aker Kvaerner was awarded the contract for the Front End Engineering Design (FEED) of the CPF. Atkins prepared the environmental impact assessment study for the project.

Tight and shale gas projects in China

Development of tight gas and shale gas projects such as Changbei is expected to help China overcome its reliance on offshore natural gas projects. To further invest in such projects, China National Petroleum Corporation signed a 30-year agreement with Shell in 2010.

As part of the agreement, Shell will develop natural gas resources present in the Jinqiu block in the province of Sichuan, China.

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