Could shale revive China’s key oil field? – International | IOL Business | IOL.co.za

“I believe and will prove that our country is not deficient in oil reserves. If I can use my 20-year lifetime in exchange for a large oil field, I will.”

Those comments are attributed to Wang Jinxi, an oil field worker who became a hero of Communist China during the 1960s and 1970s.

Wang’s drill team was credited with doing more than any other to develop the Daqing oil field amid the frozen swamps of north-east China.

“His energy to work day and night and capacity to fulfil even the most challenging task gained him the reputation of Iron Man,” according to China National Petroleum Corporation (CNPC).

Wang, originally a poor peasant from Gansu province, ended up being elected to the Communist Party’s Central Committee in 1969.

It is hard to separate the myth-making from the reality, but there is no doubting the immense achievement that the Daqing oil fields represented.

They were the first fields developed with Chinese expertise, rather than with help from the Soviet Union.

The battle for Daqing, which is how it was described at the time, liberated China from its “longstanding slavish dependence” on foreign oil, according to Premier Zhou Enlai (“Oil in China: from self-reliance to internationalisation” 2010).

Daqing is central to the history of modern China.

The first successful Daqing well was drilled in 1959, when China had barely any domestic oil production and relied on imports.

By 1973, production from Daqing had grown so much that China became a net oil exporter, a status it would retain for the next 20 years.

Daqing became a symbol of energy independence.

“Because of the discovery and construction of the Daqing oil field, our country’s economic construction, the oil needs of defence and civilian applications… are now basically self-reliant,” Premier Zhou said in 1963.

Daqing also became a metaphor for modernisation.

Zhou, Deng Xiaoping and Jiang Qing, the wife of chairman Mao Zedong, visited Daqing and employed it as a model for economic development.

In 1963, Mao pronounced that the rest of China’s industry should “learn from Daqing” and thereby launched an industrial and political philosophy that became known as “Daqing-ism”, a blend of technocracy, heroism and ideology.

But Daqing was more than just a symbol.

The field was the single most important contributor to the state budget from the 1960s through the early 1980s, and a vital source of foreign exchange earnings as China began the long, slow modernisation of its economy.

Everything about Daqing is on a superlative scale.

It is one of the largest oil fields in the world.

In 1976, production hit 1 million barrels a day, and it was sustained at that level for another 27 years before being slowed by 20 percent in 2004.

In 2009, CNPC announced cumulative production had reached 2 billion tons.

That ranks Daqing in a tiny elite group of “super-giant” fields along with Saudi Arabia’s Ghawar, Mexico’s Cantarell, Russia’s Samotlor and the US’s East Texas Field.

But Daqing is getting old. Field pressure, the reservoir’s natural energy, has dropped, making the oil harder to produce.

So CNPC has resorted to a variety of methods to maintain production rates and try to scrape more oil from the reservoir.

Out of necessity, CNPC has become a world leader in enhanced oil recovery at Daqing.

But the shale revolution has opened up yet another intriguing possibility.

Perhaps China could produce oil direct from the thick shales that are the source of much of the petroleum found in Daqing’s conventional oil and gas fields, and thereby extend the life of the field.

Shale oil and gas tends to be found in much of the same locations as conventional oil and gas fields.

In fact, shale formations are normally the source of the petroleum trapped in conventional fields.

But horizontal drilling and hydraulic fracturing have enabled producers to target the source directly rather than having to hunt for accumulations of oil and gas, which have been expelled from the source rocks and become trapped in a more permeable reservoir rock. – John Kemp for Reuters

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