Major shale oilfield discovered in Daqing

The discovery of a major shale oilfield in Daqing, Heilongjiang province, with predicted geological reserves of about 1.268 billion metric tons will further boost output in the country's biggest oilfield while ensuring national energy security, said experts.

Daqing Oilfield Co, a subordinate of China National Petroleum Corp, announced on Wednesday the discovery of the major shale oilfield. Several key exploration wells have been drilled in the Gulong formation in the oilfield, including Guyeyouping 1, Yingye 1H and Guye 2HC, all of which have yielded high volumes of oil in test production, it said.

The company aims to produce more than 1 million tons of shale oil annually by 2025 from the Gulong shale oil formation in Daqing.

Shale oil is one of the unconventional oils produced from oil shale rock fragments.

"This new discovery of shale oil in the region will ensure increasing oil and gas output growth in the long term, while further driving the development of the upstream and downstream integrated ethylene industrial chain," said Zhu Guowen, vice-president of China National Petroleum Corp and executive director of Daqing Oilfield Co.

After 62 years of intensive development, Daqing's traditional oil and gas resources are gradually being depleted and it will be hard to ensure future sustainable output, said Zhu.

The Daqing oilfield has produced 2.43 billion tons of crude since 1959. The oilfield's annual output has exceeded 50 million tons since 1976 and remained above 50 million tons from 1976 to 2002.

Analysts said the shale oil discovery will further ensure China's domestic energy security.

"The discovery helps cement Daqing's position as China's largest onshore oilfield while contributing to national oil supply security," said Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute.

"China is the second country that has achieved breakthroughs in the shale oil and shale gas sector after the United States, and it is now on a fast path of developing its shale oil with several breakthroughs made in recent years," he said.

Tang Sisi, an analyst at research firm BloombergNEF, said since 2018 China's oil production has begun to reverse a period of long decline.

"Domestic oil and gas production is expected to grow over the next years, as China's oil sector accelerates exploration and increases upstream capital expenditure in conventional and nonconventional production," she said.

Figures released by the National Bureau of Statistics show that China's domestic oil production has been gradually increasing from 189.11 million tons in 2018 to 191.01 million tons in 2019 and 194.92 million tons in 2020.