By Zhou Jianqi, Enterprise Research Institute, DRC & Chen Junjun, China Economic Times

Research Report, No.26, 2021 (Total 6091) 2021-3-1

Abstract: The high-quality development of China’s oil and gas industry in the new era hinges on technological innovation. One of the key fields for innovation is to improve the efficient use and production of low-pressure gas wells. The mid-to-high production period for these wells usually lasts merely for five to eight years before phasing into a low-pressure state and resulting in plummeting production volume. Therefore, it is of great significance to unleash the potential of low-pressure gas wells. China has now made breakthroughs and remarkable progress in the innovation of supercharging equipment. However, the application of such equipment still faces some problems to be addressed. First, its application in the market is restricted by institutional arrangements for lack of incentives. Second, the manufacturers of such equipment face an institutional hurdle for cooperating with downstream clients. Third, the continuously advanced technological innovation for the industry is not adequately bolstered by collaborated innovation from the supply chains. These problems are common in the oil and gas equipment innovation. This paper sets forth the following policy options. An incentive mechanism needs to be established for the market application of new-type equipment in the oil and gas industry; enterprises in the oil and gas sector need to form new mechanisms for innovation-oriented cooperation with new equipment manufacturers; efforts need to be made to promote collaborated innovation activities across the supply chains.

Keywords: low-pressure gas wells, efficient use, technological innovation, policy options