Shengli Oil Field Economic R&D InstituteNortheast Asia Petroleum Forum 2009The Study for the Development Practice and Lawof Onshore Old Oil Fields in Eastern China

September20092009
IEEJ: November

IEEJ: November 2009
Shengli Oil Field Economic R&D Institute

In 2008, Chinese dependency on foreign
oil grew up to 50 percent for the first time.
The contradiction between supply anddemand has become increasingly
conspicuous. Currently, steady oil productionof the eastern old oil fields is still a key
problem to stabilize the crude oil productionof China at 0.18-0.20 billion tons annually. In
2008 the output of the crude oil of Daqing,
Shengli, Liaohe Oilfield altogether accounts
for more than 40 percent in China, and the oil
production of all the eastern old oil fields
accounts for 2/3 of China's crude oil output.

IEEJ: November 2009
Shengli Oil Field Economic R&D Institute

The eastern old oil fields refer to theonshore old oil fields located in the east part
Songliao

to the line Daxinganling-Taihang-Wulingshan,
including Songliao, North China (Bohai Bay),
Nanxiang, Jianghan, as well as other

HuabeiBohai

important hydrocarbon bearing basins, inwhere the proved reserve of the oil and gas
accounts for 67.2 percent of china.

JianghanAccording to the latest round ofassessment, the future resource volume ofthe eastern oil fields is 41.8 billion tons,
accounting for 39 percent of all China’s oil
and gas resource volume, and their originaloil in place(OOIP) is 32.4 billion tons,
accounting for 47 percent.

IEEJ: November 2009
Shengli Oil Field Economic R&D Institute

The oil reserve of China and the eastern oil fields Unit: Million tons
China

Easternoil fields

Proved original oil in place(OOIP)

27517.05

18498.61

67.2%

Undeveloped original oil in place

7719.674032.73

52.2%

Technological recoverable reserve

7604.685656.90

74.4%

Undeveloped technological recoverable
reserve

1372.94729.6053.1%

Remaining technological recoverable
reserve

2784.221695.25

60.9%

Economic recoverable reserve7851.255930.93

75.5%

Undeveloped economic recoverable reserve

866.80396.37

45.7%

Remaining economic recoverable reserve2058.101235.84

60.0%

Accumulated crude oil production

4820.463961.6282.2%

Proportion

The Study for the Development Practice and Law ofShengliOil Field
R&D
InstituteOnshoreOldEconomic
Oil Fields inEastern
China

Content
1

The review of the major eastern oil fields’ development history

2

Main problems in the late development stage in the major
eastern oil fields

3

The study for the practice and law of development of theeastern old oil fields

4

Law and enlightenment of the development of the eastern
old oil fields of China

IEEJ: November 2009

1.
Review
the major
easternoil fields’
development history
Shengli
OilofField
Economic
R&D
Institute
By the end of 2007 there are 10 on shore oil fields in the eastern China,
among which Daqing and Shengli rank the first and second respectively inthe aspect of oil production, and Liaohe oil filed is the fourth largest oil field.

Daqing oil field
1959

founded

1960

Start
development

1976

Annualproduction
50M tons

1996

Annualproduction
56M tons

IEEJ: November 2009

By the end of 2008, the annual
oil production of Daqing is about
40.2 million tons, and its
accumulative oil production of
Daqing oil field breaks 2 billion
tons, accounting for more than 40
percent of the crude oil output of
the onshore oil fields at the same
period. Currently the recovery
factor of its major oil fields isabout 50 percent.

1.
Review
the major
easternoil fields’
development history
Shengli
OilofField
Economic
R&D
Institute

Shengli oil field
1961

founded

1964

Start
development

1978

1987

1991
IEEJ: November 2009

Becoming
the second
largest oil
field
Annualproduction
30M tons
Annualproduction
33.53Mtons

By the end of 2008, theannual oil production of Shengli is
about 27.7.2 million tons, theaverage recovery factor of Shengli
oil field is about 28.9 percent, andits accumulative oil output is 936
million tons. Until now its
accumulative proved original oil inplace(OOIP) is 4824 million tons,
the proved gas geology reserve is
50 billion cubic meters, and its
annual three stages of oil reserve
volume exceeded 100 million tons
in past 6 consecutive years.

1.
Review
the major
easternoil fields’
development history
Shengli
OilofField
Economic
R&D
Institute

Liaohe oil field
Liaohe oil field, founded in 1970, reached its production summit 15.52
million tons in 1995.From 1996 Liaohe oil field entered into the stages of
production shrinking. As of the end of 2007 its annual production is 12 million
tons and its accumulative proved original oil in place(OOIP) is 2587 million tons,
its accumulative oil production is 354 million tons, and its average recovery
fator is 22.6 percent.
Basic situation of the three eastern oil fields Unit: million tons
Oil field

Founded Accumulative
proved originaloil in place

Accumulative
production of
crude oil

Averagerecoveryfactor(%)

Present
annualproduction

Daqing

1959

6000

2000

50

40.2

Shengli

1961

4824

936

28.9

27.7

Liaohe

1970

2587

354

22.6

12

IEEJ: November 2009

The Study for the Development Practice and Law ofShengliOil Field
R&D
InstituteOnshoreOldEconomic
Oil Fields inEastern
China

Content
1

The review of the major eastern oil fields’ development history

2

Main problems in the late development stage in the major
eastern oil fields

3

The study for the practice and law of development of theeastern old oil fields

4

Law and enlightenment of the development of the eastern
old oil fields of China

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.1 Lacking substitute resource reserve and being difficult in employing
the newly added reserve.
All of the three major old fields presently are facing the sameproblem of difficulty in finding the replaceable resource. As thedeepening of the oil exploration, the condition of the remaining oil
resource is becoming more and more complicated, it is more andmore difficult to explore, and geological targets are becoming more
and more complex, the abundance of the oil are becoming lower andlower, and the quality of the reserve is becoming worse and worse,
which leads to the increasingly growing up in the hydrocarbon
exploration cost and it is more and more difficult to employ the newly
added reserve.

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fieldsMost of its newly added reserve has thecharacteristics of low abundance, low
production, difficult optimization and hightechnology demand, and approximately 60

DaqingOil
Field

percent of the reserve belongs to hard
extracting reserve with low perforation, lowpermeability, and low flow ratio. Therefore
there are only a few objectives that can beapplied as the strategic replacement basins.

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fieldsFrom the point of the composition of
newly added proved reserve, the proportion of
the low quality reserve with low permeability,
heavy oil, under complicated diving mountain

ShengliOil
Field

and sea beach is rising from 47.3 percent in
the “eighth five years” to 69 percent of “tenth
five years”. Currently, the low quality reservewith deep locating, low permeability accounts
for 75 percent, in which the reserve in the
deep layer with low and ultra-low permeability
has accounted for 60 percent.

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fieldsFrom 1996 Liaohe oil field has enteredinto the stage of production declining, and in2008 its rank lowered down from 3rd to 4th.

Liaohe
Oil
Field

The exploration of onshore oil fields of Liaohe
oil field has entered into highly mature periodwith annual resource discovered becoming
less and less, and its resource quality islowering, reserve replacement rate andreserve to production balance coefficient areunder 1.

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.2 The exploration difficulty is rising in the extra-high water content
period and the casing damage is becoming more and more severe.

After decades of development the three major oil fields have enteredinto high water content stage, the contradiction between unbalanced
reserve and production is conspicuous, the pressure of increase in thewater content and decrease in oil production is rising. With the growth of
the number of the extra-high water content wells, the low efficient orinefficient circulation of the water injected under the ground is becoming
more and more serious, which results in the increase of the casing
damaged wells.

IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
The comprehensive water content rate of Daqing oil field reaches
87.71 percent and most of its major oil fields enter into extra-high watercontent period. The number of the casing damaged wells is increasing.
The casing damage affects the production of oil field and results in morethan 1 billion Yuan’s economic damage annually.
The major oil fields of Shengli oil field have entered into “three high”
stage prevalently, with the water content rate up to 90 percent and natural
decline rate 20 percent. By the end of 2006 there are about 4 thousandcasing damaged wells in Shengli oil field and there will be another 400
casing damaged wells added annually
The present natural decline rate of Liaohe oil field is 28.92 percent.
Currently there are approximately 2800 wells without producing and thefigure is rising by 10 percent every year. Among the wells the casing
damaged wells account for 35 percent.
IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.3 The infrastructure is aging and the ground engineering system aswell as the load of different areas is imbalanced.
The old oil fields are generally operated in heavy load, parts of theinfrastructures are aging. Some storage tanks haven’t been repaired formany years and the pipes for transporting the oil eroded seriously.
According to the investigation in the pumps, heating stoves, containers,
and kinds of tanks as well as pipes, generally problems such as low
efficiency, erosion, aging, thinning and perforation of the pipe wall will
occur after ten years of operation. These wounded facilities possess
safety problems in production. Moreover, as declination of the crude oil
production, water contented in the oil is increasing, and the unit energy
consumption showed an upward trend year after year, the problems of theground oil gathering and transporting system are becoming more andmore prominent, the original designed capability of part of the stations,pipes, and equipments can’t fit practical production.
IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.4 The contradiction among investment, production, and cost is
becoming more and more prominent.
It is more and more difficult for the old oil fields to explore, which leads tothe continuous uprising in exploration and development cost. In order to stabilize
the production the three large old fields took the measure of secondary or third oil
recovery, which made their oil cost keep on increasing. From 2001 to 2006, theunit exploration cost and unit development cost of the three oil fields rose indifferent extent.
Comparison of the discovery cost Unit:$/barrel
Unit discovery cost

2001

Shengli oil field

2.49

Liaohe oil field
Daqing oil field

IEEJ: November 2009

2002

2003

2004

2005

2006

2.37

2.57

2.65

3.21

2.38

1.69

1.74

4.85

5.21

5.24

3.31

1.73

1.89

2.46

2.38

0.95

3.27

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.5 There are still lots of bottle-neck technologies of oil exploration anddevelopment in the old oil fields
As the condition of the old oil reservoir are becoming more and more
complicated, hard developing marginal reserve increases, the production
potentiality of the old areas is becoming smaller and smaller. With the third oil
recovery changing to subsequent water flood, the exploratory technologies arefacing new challenges, for example, the exploratory technology suitable forcomplicated objectives should be enhanced, technology of describing remaining
oil reserve of the old oil field should be improved, and the technology ofenhancing oil recovery factor and chemical compound drive technology should be
improved. In Daqing oil field the seismic technology to identify river channel inFuyang oil zone should be improved, and in Shengli oil field there’s still lack of
the technology definitely describing the structure and reservoir of diving
mountains.
IEEJ: November 2009

2. Main problems in the late development stage
Shengli Oil Field
Economic
R&DoilInstitutein themajor eastern
fields
2.6 Disposal of the contaminated matters can’t meet requirement, theenvironment problem is still prominent.
The oil enterprises belong to the high polluting industry. Oil exploration anddevelopment will bring pollution to the environment. The soil will also be
contaminated by the fallen oil, polluted water, sewage, and chemicals discharged
during the operation of downhole service. Therefore the task to control industrial
pollution is still very hard.

IEEJ: November 2009

The Study for the Development Practice and Law ofShengliOil Field
R&D
InstituteOnshoreOldEconomic
Oil Fields inEastern
China

Content
1

The review of the major eastern oil fields’ development history

2

Main problems in the late development stage in the major
eastern oil fields

3

The study for the development practice and law of the eastern
old oil fields

4

Law and enlightenment of the development of the eastern
old oil fields of China

IEEJ: November 2009

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
3.1 To strengthen exploration, ensure increase of reserve, andaccomplish the balance between reserve and production.

DaqingOil Field

Since 2004 Daqing oil field has accomplished its proved
original oil in place(OOIP) over 100 million tons annually in 5
consecutive years. Thanks to using new technologies, in 2008
Daqing oil field accomplished its newly added three stages of oil
reserves over 600 million tons and newly added gas reserve 50.7
billion cubic meters

The proved oil and gas reserve of Daqing oil field in the resent years
Newly added proved original oil in place

2004

2005

2006

2007

2008

Oil ( million tons)

104

102

106

105

267

102.4

100

101.5

50.7

Gas (billion cubic meters)

IEEJ: November 2009

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
ShengliOil Field

Shengli oil field has its characteristic rolling exploration technology. The
theories of hidden reservoir and beach sand reservoir technology have been
improved rapidly, and the new round of high and fine seismic technology indevelopment has achieved a lot, which raises the proportion of finding new proved
reserve.
The basic condition of oil and gas proved reserve in Shengli oil field
Newly added proved original oil in place

2004

2005

2006

2007

2008

Oil ( million tons)

103

100

92

102

104

Gas (billion cubic meters)

6.26

IEEJ: November 2009

1.58

0.45

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
LiaoheOil Field

From 2005 after the secondary recovery strategy was taken, there’s abreakthrough in special lithological reservoir technology, which leads to its newly
added proved original oil in place growing up to 56.63 million tons and lays asolid foundation for stabilizing the annual production to 12 million tons.

The basic condition of oil and gas proved reserve in Liaohe oil field
Newly added proved original oil in place 2004 2005 2006 2007 2008
Oil ( million tons)Gas (billion cubic meters)

IEEJ: November 2009

30

25

33

54

0.55

0.33

54

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
3.2 To strengthen the innovation of production technology and try
to enhance the recovery factor
Present recovery factor
DaqingShengli

Liaohe(2005)

50

28.9

24.4

DaqingOil Field

From 1960s Daqing oil field began to research and develop
the third production technology. Presently its production by
third recovery accounts for 25 percent of its whole oil
production, the production by third recovery stabilized at 10
million tons for 7 consecutive years, and its accumulative
incremental reserve would be equal to a newly founded oil fieldwith its reserve over 100 million tons.

IEEJ: November 2009

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields

ShengliOil Field

LiaoheOil Field

Currently with the development of the technology forincreasing the recovery factor, the annual third recovery
production in Shengli oil field stabilizes at 1.7 million tons.
Since 2008 after the dual-scale polymer flooding technology
was applied extensively, the anticipated recovery factor will be
increased by 11.1 percent.
In liaohe oil field, due to application of secondary
development theory, new development means and technologies,
the recovery factor has been increased drastically. The oilrecovery factor of Xinhai 27 area which is regarded as thedemonstration project of the secondary development will be
expected to increase to 50 percent from 15.3 percent after
application of the secondary recovery technology.

IEEJ: November 2009

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
3.3 To optimize and adjust the grounding engineering, complement the
injection and production well network, and prolong the casing life.
After the old oil fields entering into high water content period, part of the
facilities of the old oil fields will be left unused, and energy consumption will rise.
Coupled with the aging of facilities, the workload of renewing and maintaining
increases drastically.
Through optimization and adjustment of the ground system, reducing theexcessive capability, and stopping or lowering the lower load as well as aging
stations and facilities, the investment of renewing and alternating facilities as wellas the operation energy consumption are reduced. Meanwhile by strengthening
investment to the grounding system, applying advanced guiding technology
conducting technology innovation to the grounding facilities, the water content
rate and natural declining rate can be controlled effectively.
Moreover, by enhancing cementing quality and protecting the casing, the lifeof the casing was prolonged effectively.
IEEJ: November 2009

3. The study for the development practice and law ofShengli Oil Field
Institute
the Economic
eastern oldR&D
oil fields
3.4 To increase management efficiency through management innovationand fine management
Through management innovation and fine management, in 2008 in Daqing
oil field, 68 stations of vary kinds has been canceled during designing the
productivity engineering, which saves grounding engineering investment about
1366 million Yuan.
In Shengli oil field through strengthening cost, investment and cash
management, in 2008 it fulfilled several thousands of cost control task entitled by
SINOPEC.
In Liaohe oil field the secondary development system has been formed,
which provides strong support for its production stabilizing at 12 million tons, andnow its secondary development technology has been used widely in CNPC.

IEEJ: November 2009

The Study for the Development Practice and Law ofShengliOil Field
R&D
InstituteOnshoreOldEconomic
Oil Fields inEastern
China

Content
1

The review of the major eastern oil fields’ development history

2

Main problems in the late development stage in the major
eastern oil fields

3

The study for the practice and law of development of theeastern old oil fields

4

Law and enlightenment of the development of Chinese
eastern old oil fields

IEEJ: November 2009

4. Law and enlightenment of the development ofShengli Oil
Field eastern
Economic
Institute
ChineseoldR&Doil fields
4.1 To strengthen research on the theory and technology of oil
exploration and development

Presently there are still a lot of theory and technology problems needed to besolved urgently, such as the theory of gathering the remaining oil in the old fields,
exploration technology of the hidden oil, production of the low permeability oil
and recovery factor increasing technology. In order to solve the above problems
the following measures should be taken: Firstly, the investment to the oil
exploration and development scientific research should be increased to theinternational standard with the investment accounting for 3 percent of overall
sale’s revenue. Secondly, the scientific research cooperation should be
strengthened among different sections and firms.

IEEJ: November 2009

4. Law and enlightenment of the development ofShengli Oil
Field eastern
Economic
Institute
ChineseoldR&Doil fields
4.2 To strengthen the popularization and application of the key oil
exploration and development technology

Each of the three oil fields has its comparatively advanced technologies, suchas the third development technology of Daqing oil field, the heavy oil production
technology of Liaohe oil field and complicated well technologies. The stateshould break the monopoly of the three state owned companies including CNPC,SIPEC, and CNOOC in the name of funding provider, in the principle ofminimum profit, encourage intellectual transaction among them and popularize
the key mature exploration and development technologies, so that thesetechnologies can be used widely and the exploration and development cost will bedecreased drastically.

IEEJ: November 2009

4. Law and enlightenment of the development ofShengli Oil
Field eastern
Economic
Institute
ChineseoldR&Doil fields
4.3 To optimize the grounding engineering system as well as injection andproduction well network, to promote the application of energy saving andenvironment protecting technology
As the development of science and technology, together with the requirementof implementation of national energy saving and discharge reducing policies andlaws, the eastern old oil fields should optimize grounding engineering system andinjection and production well network by abandoning the original well network,rebuilding well networks, choosing new development approaches to promoteenergy saving and environment protection. The optimization of the grounding
system should be coupled with the design and implementation of the development
plan. persist the optimization principal of integrating geology, technology, andgrounding engineering.

IEEJ: November 2009

4. Law and enlightenment of the development ofShengli Oil
Field eastern
Economic
Institute
ChineseoldR&Doil fields
4.4To endeavor to push the management innovation and make profit
through strengthening management
Through constructing and complementing varies of systems, strengthening
inner management, the oil fields should try to promote management innovation,complete budget, inner control, assessment, and supervision system, andstrengthen information system construction and promote scientific managementlevel.
(1) To strengthen budget management.
(2) To strengthen fine management.
(3) To strengthen supervision management.

Contact : report@tky.ieej.or.jp

IEEJ: November 2009