Pioneering Shale Gas in China: China Sichuan Shale Gas Joint Cooperation Project
Authors: Feast Nick , Hackbarth Claudia J. , Yuzhen Huang , Gengshen Chen 
Published: March 2015

Background

Starting in January 2010, Shell and PetroChina have been evaluating an area of Joint Cooperation in the Sichuan Basin, China with the goal to explore, appraise, and ultimately develop a Shale Gas opportunity. The area of interest covers some 3500 km2 in largely agricultural, hilly terrain. Since project inception, two vertical and three horizontal wells have been drilled and hydraulically fractured, demonstrating the lateral pervasiveness of the Lower Silurian Longmaxi Formation shale and the flow of gas to surface in each of the wells. An extensive data gathering and evaluation programme has been executed. Core and log data, engineering data and fluid samples have been collected and analysed. Microseismic monitoring of a 9-stage fracturing treatment horizontal well using deep and shallow instrument wells has also been trialled with good results. This programme is the most advanced foreign co-operation shale gas project in China to date.

Hydrocarbons stored in ultra-low permeability reservoirs have a high level of strategic significance in China for various reasons:The "shale gas revolution" in North America has greatly influenced the energy balance there;China shale gas resources are estimated by many to be as high or greater than the USA, although uncertainty is very high and there are no shale resources currently under commercial production;China has a growing energy demand overall;Natural gas, a clean fuel, currently comprises a relatively small share of the country's energy mix;China leadership has reportedly targeted shale gas production of 6.5 bcm/yr by 2015 and introduced price incentives to help encourage its rapid development.

As a subset of the total China estimated resource base, it has been estimated that the amount of shale gas resource in the Cambrian- and Silurian-age strata within the Sichuan Basin is 1.5 to 2.5 times that of conventional resources (Yongqiang et al., 2012). If correct, this is a very significant potential to be developed. However, there are many challenges for developing hydrocarbons stored in ultra-low permeability reservoirs in general, and Sichuan potential shale resources in particular.

First, such low permeability reservoirs will not produce at commercial rates without treatment to create higher-permeability connections to the wellbore. Hydraulic fracturing accomplishes this goal but is expensive and requires technical sophistication to plan and then good expertise to execute effective stimulation. Second, for most resource configurations the reservoir is best developed with long horizontal wells and multiple fracture stages in order to create a large stimulated rock volume around each well. Horizontal wells are more difficult to drill, including steering of the drill bit to stay in the preferred zone. If the resource has high structural complexity, this issue is especially difficult. Third, the small stimulated rock volume around each wellbore (i.e. a relatively small drainage area), plus low matrix porosities (3–10%) combine to give modest ultimate well recoveries compared to conventional projects with similar reservoir pressures. Fourth, the small drainage area leads to a requirement for hundreds of wells which consequently results in a high development cost and more significant "footprint".