Frontiers and Outlook of Future Exploration in China

SHEN Pingping DENG Yunhua (CNOOC Limited,China) ZHAO Wenzhi NIU Jiayu LI Xiaodi
(PetroChina Company Limited, China)

JIAO Daqing (China Petroleum and Chemical Corporation)

Abstract :

Oil and gas exploration in China has made great progress in the past 5 years from 1996 to 2000.

In eastern China, oil reserves have been increased by extensive exploration in mature exploration basins, with enough discoveries to maintain stable oil production over the past 5 years. In western China, many new large oil-gas fields have been discovered in new plays, which have rapidly increased both oil reserves and production. In the case of gas exploration in west China, several giant gasfields discovered in the Tarim, Ordos and Sichuan basins have doubled gas reserves over the past 5 years. In the Bohai bay area, several new giant oilfields have been discovered in new sequences, and the Bohai bay area will become an important oil production base in the next few years. The future exploration frontiers are foreland basins and new sequences of cratonic basins in western China, deep sequences and subtle traps in eastern Chinese basins, and the offshore area of Bohai Bay. It is estimated that the increasing trend of oil reserves seen during past 5 years will continue through 2015. Oil production in China will keep growing over the next 15 years, and gas reserves are expected to expand rapidly. Domestic production of oil will meet over 60% of domestic demand in China, and gas production and supply will fully meet domestic demand over the next 15 years.

Introduction
China is an oil-productive country. The annual oil production of China was 1.6x108 tons in 2000, which ranks fifth in the world. Meanwhile, China is also an oil consuming country, consuming 2.1x108 tons of oil in 2000, of which about 6.0x107 tons were imported from other countries. When analyzing the oil-gas supply-demand situation in China for the future 5~10 years is helpful to know the Asian-Pacific petroleum supply-demand trends for the next 10 years. It is predicted that future oil-gas demand in China will be further increased. Based on predictions and analysis of oil and gas resource potential, distribution and favorable exploration targets, various authors have gained detailed insight into the oil and gas supply and demand situation in China over the next 10 years.

1. New Advances in Oil-Gas Exploration in China

From 1996 to 2000, Chinese petroleum exploration been significantly stepped up. To meet the new exploration challenges, comprehensive research methods and advanced exploration technology have been deployed, resulting in the constant discovery of new large-scale oil-gas fields such as PL19-3, QHD32-6, Kela-2, Ansai and so forth. Recoverable reserves in China have increased to about 8.0x108 tons of oil and 6.0x1011 m3 of gas in the five years from 1996 to 2000,

guaranteeing a sustainable increase of domestic oil-gas production. As of 2000, the cumulative recoverable proven oil reserves of China are 6.1x109 tons, and gas reserves are 1.6x1012 m3 .

1.1 Mature Exploration Areas in East China

Eastern China has greatly benefited from exploration of subtle oil-gas reservoirs and evaluation exploration. In Songliao Basin, exploration has gradually moved to looking for lithologic oil reservoirs after discovering these oilfields on the Daqing Long Gentle Anticline (as it is known). Through this re-focus of exploration, large-scale oilfields such as Chaoyang, Yushulin, Toutai, Zaozhou, and Yongle were discovered one after another east of the Daqing Long Gentle Anticline, composing the large Songfangtun-Toutai-Zhaoyuan lithologic oil reservoir distribution area. The Longhupao, Puxi, Qijia, and Tahala-Yingtai oilfields, with over 1.0x108 tons of reserves, were discovered in the Qijia-Gulong Sag west of Daqing Long Gentle Anticline, which is rapidly becoming an important alternative area for supplying oil. In the south part of Songliao Basin, oil-gas exploration gradually has shifted from seeking structural and fault-block traps to lithologic and structural-lithologic traps. From 1996 to 2000, 3.4x108 tons of oil-in-place were proven in lithologic oil reservoirs on both sides of Daqing Long Gentle Anticline, along with 2.1x108 tons south of the anticline. The annual production from these low-permeability lithologic reservoirs has achieved 8.0x106 tons. Great benefit has been gained from evaluation exploration in the Tertiary Shahejie formations of Bohai Bay Basin, maintaining a stable increase in oil-gas reserves. Success in exploration has been achieved in the onshore area of Bohai Bay, with the discovery of middle-scale oilfields such as Yuehai with recoverable reserves of 1.8x107 tons. Moreover, exploration on buried hills, sand-conglomerate bodies, and volcanic bodies etc has achieved many advances, and these areas have become new frontiers for increasing oil reserves in mature exploration areas. Re-analyzing old data is a very effective method to further increase oil-gas reserves in mature exploration areas. Around 2.0x104 tons of oil reserves are annually discovered by re-analyzing data from drilled wells and seeking oil-gas bearing horizons that were ignored in the past.

1.2 Frontier Areas in Western China

Western China is rich in petroleum resources. But the proven rate of oil-gas resources is frequently low. Exploration in western China became active over the last 5 years, rapidly increasing proven oil-gas reserves. From 1996 to 2000, the proven reserves in western China rose to 1.4x109 tons, an increase of 57% over reserves in the previous 5 years, and composing 32% of our domestic proven reserves for the same period. In particular a breakthrough has been achieved in gas exploration. The accumulative proven reserves of gas are 8.5x1011 m3, an increase of 64% over reserves in the last 5 years, and composing 92% of our domestic proven reserves for the same period. Firstly, several discoveries have been made in four foreland basins in western China. Kela-2 gasfield with recoverable proven gas reserves of 1.9x1011 m3 was discovered in the Kuche foreland, Tarim Basin, in which has also been discovered the Tuziluoke, Dabei, Yinan and Dina gasfields, indicating a new gas-rich zone. In the middle section of the southern foreland margin of Jungar Basin, Hutubi Gasfield was discovered with recoverable proven gas reserves of 1.1x1010 m3 and condensate of 1.9x105 tons. Commercial oil and gas were also found in the Tertiary Anjihai formation in the western section of Kadilake Anticline, and Tugulu Anticline in the

middle section. In the northwest foreland margin of Sichuan Basin, a gasfield group (including Baimamiao) was discovered, as was Nanbaxian oil-gas field in the northern foreland margin of Qaidam Basin. Secondly, the newly discovered oil-gas bearing sequences help to maintain a stable increase in oil-gas reserves. Cretaceous and Jurassic oil-gas fields with recoverable proven reserves of 2.1x107 tons have been discovered in Luliang Area in the central part of Jungar Basin. There is a Permian gasfield with accumulative recoverable proven gas reserves of 1.7x1011 m3 in the Changdong and Changbei areas of Ordos Basin. The Dukouhe, Teshanpuo and Luojiazai gasfields in the Triassic Feixianguan formation in the Chuandong area of Sichuan Basin have total reserves of more than 1.4x1011 m3. Tahe oilfield, with recoverable proven oil reserves of 2.3x107 tons, was discovered in the Ordovician of the Tarim Basin.

1.3 Offshore Area of Bohai Bay

In the last five years, big successes in oil-gas exploration have been gained in the offshore area of Bohai Bay, bringing rapid growth in oil reserves. Many years of onshore oil-gas exploration experience told Chinese petroleum explorers that the lower Tertiary would be the major exploration target sequence. But bad results were achieved when the onshore experiences were applied to offshore oil and gas exploration. After contrasting the differences in petroleum geological features between onshore and offshore, research on the upper Tertiary has been increased in recent years, leading to the discovery of nine large-scale oilfields such as NB35-2, PL19-3, BZ25-1, CFD11-1, CFD12-1, BZ29-4, PL9-1 and LD27-2, with predicted total recoverable proven oil reserves of 2.7x3.5x108 tons. Besides which, other oil-gas fields (including Chunxiao, Dongfang1-1, Ledong22-1 and so forth) have been discovered at East Chinese Sea, Yinggehai Sea and Qongdongnan Sea. In recent five years, the accumulative recoverable proven oil reserve on offshore is 8.4x108 tons, gas reserve 1.7x108 m3. Annual production in 2000 achieved 1.8x107 tons, an increase of 109% over that in 1995.

2. Oil-Gas Resources Potential in China

2.1 Oil Resources

China is relatively rich in petroleum resources. But the quality of petroleum resources is relatively poor. It was recently predicted that the ultimate recoverable oil resources of China would be 1.2~1.4x1010 tons, with average predictions of 1.3x1010 tons. As at 2000, the accumulative recoverable proven oil reserves were 6.2x109 tons. The proven rate of total oil resources in China is only 45.6%. There are still 6.9x109 tons of recoverable oil resources remaining to be proven, a situation of great potential. Oil exploration in China is now at a stable development stage. Oil reserves will continually increase. Based on statistics of proven oil reserves in China over past years, the average recoverable oil reserves proven annually are 1.5~1.8x108 tons. The reasons that our proven oil reserves can maintain an increase over long periods of time are the following: Firstly, we know more about the distribution of oil and gas, raising the success rate of explorative wells, and

including discovering a group of middle- and large-scale oil-gas fields. Secondly, advances in explorative technique and method also make the distinguishing and description of favorable explorative targets more objective and accurate, which has resulted in a series of important discoveries. In the past 5-10 years, the composition of Chinese proven oil reserves and annual oil production is changing, with an increasing proportion of oil reserves and output from western China and the offshore area of Bohai Bay. In western China, about 1.3x108 tons of recoverable oil reserves in total were proven from 1986 to 1990, 2.0x108 tons from 1990 to 1996, and 2.6x108 tons from 1996 to 2000. Meanwhile, oil production has also grown from 6.2x106 tons in 1980 to 2.6x107 tons in 2000, and is about 16% of the total oil production of China for that year. It is estimated that annual oil production from western China will reach 3.8~4.5x107 tons in the future 5-10 years, and will compose 22~25% of the total domestic oil production in China at that time. Offshore oil production was up to 2.2x107 tons in 2000, and was about 13% of the total production of China that year. Based on CNOOC planning, offshore oil production in 2010 should be up to 3.5x107 tons, about 18~22% of our total domestic production that year. Therefore, western China and offshore areas will be the major bases for increasing in proven oil reserves and annual production over the future ten years. Above analyses show that annual growth in recoverable oil reserves in China will maintain a level of 1.7~1.9x108 tons over the next 10 years, within which 0.8~1.0x108 tons will derive from eastern China, 0.6~0.8x108 tons from western China, and 0.3~0.4x108 tons from offshore. It can be predicted that domestic oil production in China will basically meet our demand for oil over the next 10 years.

2.2 Natural Gas Resources Potential

China is also rich in natural gas. The ultimate recoverable reserves of gas are approximately 9~11x1012 m3. As of 2000, accumulative recoverable proven gas reserves were 1.9x1012 m3 in China. The accumulative production was 3.0x1011 m3. The remaining recoverable reserves are 1.6x1012 m3. The annual gas production of China is 2.8x1010 m3. So far, 7~9x1012 m3 of recoverable gas resources remain to be proven. Natural gas exploration is now at a rapidly growing stage in both discoveries and reserves. In past ten years, gas exploration has achieved a series of discoveries in the Ordos, Sichuan and Qaidam basins as well as in the offshore area of Yingqong Basin, finding a group of middle- and large-scale oil-gas fields and causing natural gas reserves to be increased multiple times. In total 4.4x1011 m3 of recoverable gas reserves have been proven in China from 1991 to 1995, averaging 8.9x1010m3 of natural gas reserves proven annually, much more than the total for the previous 40 years before 1990. From 1996 to 2000, the recoverable gas reserves proven in China were 6.3x1011 m3, averaging 1.3x1011 m3 a year. It is estimated that proven gas reserves will increase 1.3~1.4x1012 m3 over next ten years. If our country can continue to encourage policies and enforce strict environmental-protection regulations to guarantee construction of natural gas pipelines and development of downstream markets, China will be able to produce up to 9~10x1010 m3 of natural gas annually over the future ten years.

3. Oil-Gas Exploration Frontiers in 21st Century

Major petroliferous basins in China generally enter the mature exploration stage after more than 50 years of oil-gas exploration. Future growth in oil-gas reserves will mainly rely on new strata and new areas in these major basins. Based on oil-gas exploration advances and resources potential, oil-gas exploration in China will chiefly focus on five exploration frontiers: Foreland basins in western China: Resulting from several periods of orogenesis, many foreland basins were formed at the front edge of major mountains in western China. These foreland basins include the Kuche foreland basin on the northern margin of the Tarim Basin, the Taxinan foreland basin on the south margin of the Tarim Basin, the foreland basin on the southern margin of Jungar Basin, the one on the western margin of the Ordos Basin, and the one on the western margin of the Sichuan Basin and so forth. These foreland basins were strongly deformed, forming low hills at ground-surface and complicated overthrust structures underground. The exploration level in these basins is quite low. Successes have been achieved in the forelands of the Tarim and Jungar Basins, with the discovery of the Kela-2 gasfield and so forth, indicating the potential of these exploration prospects. Low-permeability oil-gas reservoirs: The unique geological history of China formed many world-class terrestrial petroliferous basins, which have characteristics of multiple depositional material sources, short transportation distances, low maturity minerals, low porosity and low permeability reservoir rocks, low abundance of oil-gas reserves, and a large area of distribution. Examples of this are the recently discovered oilfields around the long and gentle Daqing anticline, the Jurassic oilfields and Permian gasfields in Ordos Basin as well as the Jurassic oilfields in Sichuan Basin. Low permeability oil-gas reserves form about 30% of the annual reserves increase in recent years, and will gradually form the main body of annual reserves increase in future. Marine Carbonate Oil-Gas Reservoirs: During the Paleozoic, marine deposition was extensively developed, especially the distribution of marine carbonate rock which has a basic petroleum geological condition. At present, commercial oil-gas deposits have been found in the Tarim, Ordos and Sichuan Basins. It is also predicted that big discoveries in carbonate rocks will be made in the south part of China and Qing-Zang Region. Offshore Region: Since foreign investment was introduced to offshore exploration, oil and gas were discovered in the Bohai basin, East China Sea and the South China Sea, constantly increasing oil-gas reserves. However, due to the long foreign investment period and a shortage of domestic investment, exploration levels in offshore regions is still very low. The recently proven reserves mainly come from oil-gas-rich basins such as the Bohai, Zhujiangkou, East China Sea and Beibuwan basins. Middle- and Small-Scale Basin: There are several hundreds of Mesozoic and Cenozoic middle- and small-scale terrestrial basins on onshore region of China, which have a certain petroleum geological condition. Oilfields were already found in Hailaer, Yitong and Yanji Basins. Major frontiers in future exploration in these basins are rift basin group at the northeastern China, Jurassic basin group at the northwestern China and the Mesozoic small-scale basins in the southern China.

4. Future Supply and Demand of Oil and Gas in China

Since a policy of openness was initiated in our country, the national economy has maintained a high rate of development, causing a growing demand for oil. Over the last ten years, oil consumption volumes in China increased by an average of 5~6% each year. Meanwhile annual oil production increased less than 2% per year, and a situation of short supply in the face of demand occurred. The gap between supply and demand will get wider with increasing time. With the construction of gas transportation pipelines and increasing demand for natural gas in downstream markets, gas production and consumption volumes in China will greatly increase over the next ten years. It is predicted that natural gas in China can substantially meet domestic demand over the next 10 years, but there is a supply-to-demand gap for oil.

Conclusions
(1) Over recent years in China, important advances in oil-gas exploration have been made in the Tarim, Ordos and Songliao Basins as well as offshore regions. Increases in oil reserves guarantee the stability of oil production. Important discoveries of natural gas has established the natural gas industry. (2) The oil-gas exploration frontiers of the 21st century in China are mainly foreland basins, carbonate rock reservoirs, low permeability oil-gas reservoirs, new depressions in the offshore region, and middle- and small-scale basins. (3) China is rich in oil and gas, but exploration maturity is low. The potential for increasing oil and gas reserves is great. In particular, gas reserves will increase quickly, relaxing the demand for oil in China to a large degree.

References
Zai Guangming et al, 1996, Prospects and potentials of oil and gas in China: Explorer, 1(2): 1-5 Zhao Wenzhi et al, 1998, Analysis on development of China petroleum industry. Beijing, China Science & Technology Press Sheng Pingping et al, 2000, Prospects of petroleum resources in China and its growth in reserves in next ten years: Petroleum Exploration & Development, 27(2).