ConocoPhillips has entered into an agreement with China Petrochemical Corp., a state-owned company also known as Sinopec Group, to perform a study of unconventional oil and natural gas resources in China’s Sichuan Basin.
“ConocoPhillips remains interested in becoming involved in unconventional oil and gas development in China,” Daren Beaudo, spokesman for ConocoPhillips, told NGI’s Shale Daily on Wednesday. “ConocoPhillips can confirm we have entered into an agreement with Sinopec in the Sichuan Basin to conduct a joint unconventional oil and gas development study.”
Although Beaudo did not disclose additional details of the agreement, reports have said it is for two years and covers an area of about 3,918 square kilometers (1,513 square miles) in China’s Sichuan province. According to reports, ConocoPhillips will drill two wells in the Qijiang Block of the Sichuan Basin.
China’s shale reserves are estimated to be the world’s largest. In April 2011, an initial assessment of world shale gas resources conducted by the U.S. Energy Information Agency reported that China holds 1,275 Tcf of technically recoverable shale gas resources (see Shale Daily, April 7, 2011). That figure represents about 19.3% of the world’s total (6,622 Tcf) and is well above reserves in the United States, which were estimated at 862 Tcf.
Last summer an executive with Royal Dutch Shell plc confirmed that the company plans to invest at least $1 billion a year in unconventional natural gas exploration in China, targeting coalbed methane (CBM) and shale reserves (see Shale Daily, Aug. 23). Shell also said it plans to build a $12.6 billion refinery and petrochemical complex in the country, and move its global CBM business unit there by the end of 2012.
In March a Shell subsidiary, Shell China Exploration and Production Co. Ltd., signed a production sharing agreement (PSC) with another state-owned company, China National Petroleum Corp., the country’s largest producer (see Shale Daily, March 22). The PSC, the first of its kind in China, covers the companies’ joint exploration of the Sichuan Basin, specifically 3,500 square kilometers (1,351 square miles) of the prospective Fushun-Yongchuan Block.
Chevron Corp. is participating in a similar joint study agreement with Sinopec on 940,000 acres (see Shale Daily, March 14). A slide from Chevron’s meeting with securities analysts in March revealed that the company started drilling an initial well in China during 1Q2012.
Hess Corp. has also signed two separate agreements with Sinopec. In 2011 the companies agreed to conduct a joint study of tight oil, shale oil and shale natural gas reserves in the Shengli Oilfield and the Bohai Bay Basin.
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