Shell makes China tight gas FID

Shell makes China tight gas FID
Supermajor and CNPC to begin work on second phase development in Ordos basin later this year

Xu Yihe

14 Mar 2018 23:00 GMT Updated 15 Mar 2018 08:14 GMT

Anglo-Dutch supermajor Shell has made a final investment decision on the second phase development of its Changbei tight gas play in northern China’s Ordos basin, where the overall development plan (ODP) was put in place about three years ago.

Industry officials said Shell and its production sharing contract partner, China National Petroleum Company (CNPC), expect to begin work on the development in the second half of this year after government approval of the environment impact assessment and land use.

The ODP calls for building 26 wellpads and carrying out infill drilling at two existing wellpads and four injection wells. Other offsite facilities include three gas gathering stations and one liquid treatment plant, as well as export pipelines.

Due to come online in about two years, the new development phase will be able to produce about 2.4 billion cubic metres per annum of gas at its peak.

Sources said that CNPC Chuanqing Drilling & Exploration Company has been contracted to drill the first patch of wells involving one land rig for seven bilateral horizontal wells.

The turnkey contract also calls for CNPC Chuanqing to provide other well services including logging, casing and cementing. Shell is in the middle of selecting more drilling contractors through a tender process for two more land rigs.

Shell officials earlier told Upstream that Changbei’s second phase is technically more challenging due to geological complexities characterised by lower permeability and tight sandstone gas reservoirs.

For the second phase, which is also called New Changbei, Shell will be tackling secondary reservoirs by utilising hydraulic fracturing technology and drilling horizontal wells.

Changbei, where commercial operations started in 2007, is now producing from 45 wells. Production at the 1588-square kilometre field has reached a plateau of 3.5 Bcm per annum.

The new development will not extend beyond the borders outlined in the initial PSC signed in 2005, but the development will centre around the northern part of the play.

In 2016, CNPC took over the operatorship of Changbei’s first phase, while Shell retains 49%. However, Shell will act as operator of the field’s second phase development.