Major Oil Discovery Made in China’s Bohai Bay Basin

A game-changing discovery has been made in China with the successful completion and production of terrestrial shale reservoirs, which have maintained a natural flow for more than 260 days. This success ushers in a new era for China’s successful development of its complicated, deep, lacustrine-origin shales.

As of Feb. 27, two horizontal wells, the Guandong-1701H and Guandong-1702H wells have produced shale oil for more than 260 days by natural flow from the continental shale formation of the second member of the Paleogene Kongdian Formation in the Guandong area in the eastern Bohai Bay Basin, eastern China, with a stable daily oil production of 145 barrels and 220 barrels, respectively, and a cumulative oil production of more than 73,500 barrels. The shale oil production in the Guandong area with an estimated reserve of more than 735 million barrels marks the start of the commercial development of continental shale oil by PetroChina in the Bohai Bay Basin.

Image Caption

Research staff inspect cores from the shale oil producing formations.

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A game-changing discovery has been made in China with the successful completion and production of terrestrial shale reservoirs, which have maintained a natural flow for more than 260 days. This success ushers in a new era for China’s successful development of its complicated, deep, lacustrine-origin shales.

As of Feb. 27, two horizontal wells, the Guandong-1701H and Guandong-1702H wells have produced shale oil for more than 260 days by natural flow from the continental shale formation of the second member of the Paleogene Kongdian Formation in the Guandong area in the eastern Bohai Bay Basin, eastern China, with a stable daily oil production of 145 barrels and 220 barrels, respectively, and a cumulative oil production of more than 73,500 barrels. The shale oil production in the Guandong area with an estimated reserve of more than 735 million barrels marks the start of the commercial development of continental shale oil by PetroChina in the Bohai Bay Basin.

The Dagang Oilfield Company is a regional oil exploration and development subsidiary of China National Petroleum Corporation, with oil and gas exploration and development dating back to 1964. According to the IEA forecast, China has abundant shale oil, with recoverable resources of about 35 billion barrels, and ranks third in the world after Russia and the United States. Shale oil in China is mainly distributed in large lacustrine sedimentary basins such as the Bohai Bay Basin, Songliao Basin, Ordos Basin and Junggar Basin.

In 2013, Well Guandong-6X1 in the Bohai Bay Basin tapped the first commercial oil flow from shales. Soon after, the Dagang Oilfield Company stepped up its shale oil exploration and deployed 15 vertical wells consecutively, all of which yielded commercial oil flows.

Shale Research Team

The shale oil research team led by Zhao Xianzheng of the Dagang Oilfield Company defined major continental shale oil exploration and development areas. The organic-rich fine-grained shales of the Kong 2 Member in three key wells were systematically cored. A 500-meter interval of the Kong 2 Member in Well Kong 108-8 was cored continuously. The cores were characterized elaborately down to centimeter scale. More than 10,000 core samples were analyzed and a large database was built, laying a solid fondation for geological study and technological innovation.

Based on their research, the team proposed a new continental shale oil enrichment model of “dominant fabric facies control and surpassing effect of retained hydrocarbons.” The group has developed three patented technologies in China and in the United States, including fine-grained sedimentary rock identification and sweet-spot prediction methods, and 16 supporting techniques for stimulating shale oil reservoirs that have no natural deliverability. By implementing management procedures such as integrated exploration and development, integration of subsurface geology and surface engineering facilities, and adopting an automated platform operation to reduce cost, shale oil exploration and development has been improved significantly, with the entire industry chain of shale oil exploration and development being brought to a higher level in China.

The commercial production of continental shale oil in the Bohai Bay Basin in eastern China has been awarded the “First Prize of Important Discovery of Oil and Gas Exploration in 2018” by CNPC, and the achievement has been listed as the “Top Ten Scientific and Technological Progress” of CNPC in 2018.

To share the important lessons learned, along with new technologies and techniques, the AAPG, China University of Petroleum - Qingdao, PetroChina, and Dagang Oilfield will host a Geoscience Technology Conference to be held in the Dagang Oilfield, Tianjin in November 2019.

Comments (5)

Good Strong Rigorous Science leads to Success
The Bohai Basin is an amazing lacustrine basin system with immense stratigraphic and sedimentologic complexities due to its shear size. Our Chinese colleagues know that to make such efforts successful they need a detailed and comprehensive approach to science that requires many years dedicated to systematic analysis. It is this commitment of time, money and knowledge that have resulted in success. No "in and out" approach to this play, and we see the resulting success. Congratuations to Prof. Zhao Xianzheng and his entire team, and their collaborators. Lesli Wood
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4/25/2019 12:40:37 PM
Exciting discovery bring China to a new epoch
The shale oil research team led by Prof. Zhao Xianzheng of PetroChina Dagang Oilfield Company aimed at the new shale oil exploration domain in Bohai Bay Basin of east China, characterized the cores elaborately down to centimeter scale, tested more than 10,000 core samples, and built a large database on the basis of the 500m continuous core of Kong 2 Member taken from Well Guan 108-8. Based on in-depth analysis, they have proposed the new continental shale oil theory of “enrichment controlled by dominant fabric facies and crossover effect of retained hydrocarbons.” They have developed three patented technologies in China and the United States, including fine-grained sedimentary rock identification and sweet-spot prediction methods, and 16 supporting techniques, guiding and supporting the drilling and production of continental shale oil reservoirs. By implementing management procedures such as integrated exploration and development, integration of subsurface geology and surface engineering facilities, and adopting well-pad factory-like operation, the costs of shale oil exploration and development have been brought down, and the economy of the entire industry chain of shale oil exploration and development in China has been improved. This game-changing discovery ushers in a new era of industrial development of complicated, deep, continental shale oil in China and will take the shale oil exploration and development in China to a higher level. We hope the success will inspire oil companies to make more commercial shale oil discoveries in areas with similar geological conditions across the world.
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4/23/2019 10:27:22 PM
Integrated Petroleum Geology and Engineering Studies Pay Off in Lacustrine Shale Oil Development in China
Having been working on scientific issues and associated approaches for economical and sustainable exploration and development of shale oils from both USA and China, I am very glad to see the lacustrine shale oil exploration in Bohai Bay takes off now, with the dedicated efforts of Prof. Xianzheng Zhao, and his team of scientists and engineers, at PetroChina Dagang Oilfield Company. The breakthrough is a result of years’ effort in geological understanding (e.g., an impressive 500-m continuous core collection and detailed analyses), theoretical development about enrichment and sweet-spot identification, as well as integrated exploration and development technologies.This game-changing discovery will certainly boost the large-scale shale oil production in China and across the world. This comment is from Max Hu, a professor of petroleum geology at the University of Texas at Arlington and Editor-in-Chief of Marine and Petroleum Geology.
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4/21/2019 4:28:12 PM
Petro China Oil shale discoveries
The Shale Oil research team led by Prof. Zhao Xianzheng of PetroChina’s Dagang Oilfield Company have focused on shale oil exploration in Bohai Bay Basin, eastern China. They built a large database using 500 m continuous cores and more than 10,000 core samples. On this basis they have proposed a new continental shale-oil accumulation theory involving enrichment controlled by dominant fabric facies and crossover effect of retained hydrocarbons. This hypothesis and the resultant discoveries of shale-oil accumulation with a natural flow for more than 260 days as reported in AAPG Explorer herein has heralded a new era of industrial development of complicated, deep continental shale oil in China. We hope this success will inspire oil companies to make further commercial shale oil discoveries worldwide in areas with similar geological conditions. Ron Steel
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4/20/2019 10:54:07 PM
Major Oil Discovery Made in China’s Bohai Bay Basin
It is so pleasing to see a breakthrough has finally been made in the lacustrine shale oil exploration and production in the Bohai Bay Basin. This is indeed a game-changing discovery for shale oil exploration in China. Following the successful development of shale oil in North America, there has been extensive investment on shale oil R&D and some drillings on lacustrine shale oil plays in the Bohai Bay Basin over the past decade by Chinese government and major oil companies, but without much success. The discovery of commercially producing shale oil in the Paleogene Kongdian Formation marks a milestone for shale oil exploration in the basin and will certainly inspire more extensive shale oil exploration in various parts of the Bohai Bay Basin. I am particularly impressed by the kind of detailed characterization and research work by the shale research team in the Dagang Oilfield led by Prof. Xianzheng Zhao, and their model on the shale oil enrichment mechanisms and distribution, which led to the commercial discovery. Prof. Zhao was an invited speaker at the 2018 AAPG Geotechnical Workshop on Deep Petroleum Systems in Beijing, China that I co-organized, during which he showed the presence of multiple petroleum systems in the Bohai Bay Basin and exploration potential of both conventional and unconventional petroleum plays. Dr. Keyu Liu (AAPG No: 609296) Professor in China University of Petroleum (East China) and adjunct research fellow in CSIRO and Curtin University, Australia; Guest editor of a special issue of Journal of Asian Earth Sciences on “Formation and enrichment of tight (shale) oil resources in Chinese continental basins”
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