China Drills For Offshore Shale

by John Konrad (gCaptain) China’s National Offshore Oil Corp (CNOOC) says it successfully tapped into an offshore shale oil exploration well. This is the first time this has been done in China, and the company claims it’s a major breakthrough that will reduce China’s reliance on imported oil and gas, and improve energy security.

This comes as geopolitical issues have put China’s energy imports – the country imports more 40% of it’s natural gas and more than 70% of its crude oil needs mostly by ship – at increased risk.

“What the Gulf has – oil – is what Asia will desperately need,” says Peter Zeihan in his book The End Of The World Is Just The Beginning. “But all the local powers suffer from navies that cannot effectively patrol their own coastlines, much less escort local traffic, much less see ships safely in or out of Hormuz, much less guard tankers bound for end-consumers or bulk and container ships inbound from distant suppliers.”

If the US Navy stops providing free maritime security to commercial ships calling on Chinese ports, it will become increasingly important for China to develop domestic capacity, according to Zeihan. This outcome is increasingly possible with tensions rising between Taiwan and China and Russia remaining a wild-card in the global energy markets.

Zehian – who also authored a book on the Shale Revolution – has not commented on this announcement but has been skeptical of Chinese shale announcements in the past.

The well, Weiye-1, is located at the southwestern trough of the Beibuwan Basin in the South China Sea, and has tested daily production of 20 cubic meters of oil and 1,589 cubic meters of natural gas. The reserves of shale gas in the entire Beibuwan Basin are estimated to be about 1.2 billion tons (about 8.76 billion barrels).

“The success of the first offshore shale oil drilling marks the realization of the independent exploration and development of China’s offshore shale oil and gas resources with self-developed technology,” claims a Chinese media source.

S&P Global reports that China has large shale reserves, mostly in southwestern Chongqing and Sichuan, northern Inner Mongolia, and northwestern Xinjiang but China produces little shale due to the geographic difficulties of developing these reserves.

CNOOC hopes to accelerate building China’s offshore demonstration shale oil project in the near future.

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