Shell 2012 Upstream Output from China Falls 25% on Year
OREANDA-NEWS. March 28, 2013. Shell's net upstream production in China totaled 131,000 Mcf/d of natural gas in 2012, according to the company's annual report released.
This is down 24.7% from the 174,000 Mcf/d of net China production Shell reported in 2011, and also lower than 253,000 Mcf/d in 2010.
Shell's sole producing asset in China is the onshore Changbei tight gas block in northern Shaanxi province, where it is operator with a 49% stake, alongside state partner PetroChina which has the remaining 51%.
This suggests gross production at Changbei last year was just over 267,300 Mcf/d, down from 355,100 Mcf/d in 2011.
Changbei is one of the few major capital intensive onshore gas projects in China with foreign involvement. Its tight, or low-permeability, reservoirs required the drilling of some of the longest horizontal wells in China.
The field started commercial production in March 2007 and an annual production target of 3.3 billion cubic meters (319,151 Mcf/d) was set in 2010, according to Shell China's website.
The oil major said it amended the production sharing contract for the 1,693 square kilometer block in July last year to cover an extended development phase "for developing tight gas in different geological layers of the same block".
Elsewhere, Shell also has a PSC for the Jinqiu conventional gas block and another for the Fushun-Yongchuan shale gas block, both in Sichuan province. These are still in the appraisal stage, a spokeswoman for the company said Thursday. Shell also has a 44.1% stake in the Zitong PSC, which is near Jinqiu. PetroChina is the state partner for the three blocks.
Offshore China, Shell won two blocks in the frontier Yinggehai Basin in July last year, partnering China National Offshore Oil Corp.