The First Three Quarters Of China'S Oil And Gas Fields Meet The "Discovery Period"

In October 29th, the national energy board released the energy situation in the first three quarters of this year. China's domestic oil and gas production has become a bright spot after many years.

In the three quarter, domestic crude oil output reached 1.43 billion tons, an increase of 1.2% over the same period last year. The output of natural gas was 127 billion 700 million cubic meters, an increase of 9.5% over the same period last year, an increase of 3.3 percentage points over the same period last year. Before that, China's crude oil output fell for the three consecutive year in the third quarter. After reversing the decline, it is expected to be closer to the expected annual output of 2 billion tons in 2022.

In September 20th this year, the State Energy Bureau Director Zhang Jianhua said that China's crude oil output could recover to 2 billion tons by 2022, and natural gas production will increase by more than 10 billion years in two consecutive years.

Since the peak of 2.15 billion tons in 2015, China's crude oil output has never exceeded 2 billion tons. As the international energy situation has become more and more complex and severe in recent years, more progress should be made in the exploration and development of oil and gas resources in China, so as to further safeguard China's energy security.

It is gratifying to note that, in addition to the decline in crude oil production, this year, especially in the second half of the year, the large oil and gas resources on land and sea have been discovered continuously, and the capital expenditure of three barrels of oil has increased significantly, and China's upstream oil and gas industry has ushered in another "recovery".

Information on shale gas drilling platform in Sichuan

Policy driving industry potential

The rapid development of exploration and development in the upper reaches of China is directly related to the driving force at the policy level.

According to the public information of CNPC and CNPC, Xi Jinping, general secretary of the CPC Central Committee in 2018, made important instructions to China's oil and gas production, demanding that domestic oil companies speed up the pace of increasing production and production and fully protect China's national energy security.

In 2018, China has become the world's largest consumer of crude oil, but crude oil production has seen a sharp decline for three consecutive years. In 2018, China's crude oil dependence on foreign trade exceeded 70%, setting a record.

In 2019, the national energy board formulated the "seven year action plan" for increasing the oil and gas industry's storage and production. At the same time, in May, it vigorously promoted the work of oil and gas exploration and development. At the meeting, it stressed that "oil companies should implement the main responsibility of increasing production and production and complete the 2019-2025 2019-2025 year action plan."

This is the first time that China has put forward a "seven year action plan" in the oil and gas exploration and development industry.

After receiving instructions in 2018, Wang Yilin, chairman of CNPC, said that during the two sessions of 2019, the capital expenditure of the company will increase substantially, and PetroChina has also formulated the 2019-2025 year plan for accelerating the development of exploration and production in China.

The plan indicates that 5 billion yuan for the venture exploration investment in 2019-2025 years is 5 times the amount invested in the previous year. PetroChina has 9.3 million tons of proven reserves and 2 trillion and 100 billion natural gas reserves by the end of 2018. According to the plan, the average annual recoverable reserves of new crude oil will be 1 million tons in the next 7 years, and 300 billion additional natural gas recoverable reserves will be added.

CNOOC has also formulated a "seven year plan of action" to strengthen the exploration and development of China's offshore oil in the future. In the proposal, the exploration workload and proven reserves doubled in 2025. According to this calculation, the proven reserves of CNOOC will be raised from 4 billion 960 million barrels of oil equivalent at the end of 2018 to about 10 billion barrels of oil equivalent in 2025, and the composite growth rate of proven reserves in the next 7 years will be about 10%.

From the reports we have disclosed, three barrels of oil can be said to "spare no effort" in order to achieve this goal.

From the budget point of view, in the field of upstream exploration and development, PetroChina's capital expenditure plan for 2019 was 228 billion 200 million yuan, an increase of 16% over the previous year, exceeding the 2011-2014 year high oil price period, the capital expenditure plan reached the highest level since 2008; the Sinopec capital expenditure plan was 59 billion 600 million yuan, an increase of 41% over the same period last year, the highest growth rate among three major oil companies; and China Sea oil capital expenditure plan 75 billion yuan (intermediate value of 70 billion -800 billion yuan), an increase of 21% over the same period.

Such a strategy directly reflects the increase in output. In terms of PetroChina, the oil and gas equivalent production in the first three quarters was 1 billion 165 million barrels, an increase of 5.2% over the same period last year. In the first three quarters of Sinopec, the equivalent output of 341 million 740 thousand barrels of oil and gas increased by 1.9% compared to the same period last year.

It is worth noting that, according to the capital expenditure distribution over the past few years, the capital expenditure of the three major oil companies in the first half of the year is greater than that of the second half. However, in the case of large-scale investment in exploration and development this year, capital expenditure will remain high in the second half of the year, and "capital expenditure in the second half of this year is likely to exceed expectations". An insider told the economic news reporters twenty-first Century.

Intensive discovery of new oil and gas fields

Capital expenditure has not only led to oil and gas production, but with the development of technology, new large oil fields have been concentrated this year.

In February 25th of this year, CNOOC announced that the Bozhong 19-6 of the Bohai oilfield internal condensate gas field was approved by the Ministry of natural resources. It proved that the geological reserves of natural gas exceeded one hundred billion cubic meters, and the condensate oil reserves exceeded 100 million yuan. It was enough for millions of families to use the city for hundreds of years. It was the largest natural gas discovery in the Bohai Bay Basin over the past fifty years.

In September 29th, PetroChina announced two major oil discoveries in one day: the newly proven geological reserves of 3.58 billion tons in Ordos Basin, 6.93 million tons of geological reserves predicted, 10 billion tons of Qingcheng oil field discovered, 740 billion 971 million cubic meters of newly proven shale gas reserves in Changning Weiyuan and solar blocks, 1 trillion and 61 billion 30 million cubic meters accumulative total, forming a trillions of shale gas regions in Sichuan basin.

It is worth mentioning that with the continuous progress of technology, the cost of newly discovered oil fields can also be well controlled. An industry insider told reporters that after the preliminary demonstration, the cost of the above Qingcheng oilfield may be around 30 dollars per barrel, though higher than that of many major oil producing countries, but under the current oil price situation, there is more than enough to achieve effective development.

Coupled with the official demonstration in 2018, the 10 billion ton oil field in the Karamay Mar lake, the 100 billion level gas field discovered in the mid autumn well of Tarim, and so on, the progress in the exploration of oil and gas resources in the upper reaches of China has made significant progress.

In fact, while many people are paying more and more attention to China's crude oil imports, they ignore the fact that China is currently the eighth largest oil producing country in the world.

The United Arab Emirates, which has little difference from China's annual output, has nearly 4 times the reserves of China. At the same time, many Chinese land oil fields are very difficult to exploit, so we must ensure that continuous investment in science and technology can achieve results in exploration and development.

Although large quantities of large oil and gas fields have been discovered along with the pace of capital expenditure and technological progress, the output of crude oil can not be immediate, and there are still many problems in the future development.

In China, where the geological and surface conditions of the oil and gas exploration area are becoming more and more complex, the problem of "double high" in the old oil-bearing area and the technical bottleneck of unconventional oil and gas development, how to regress the crude oil output and stabilize it at more than 2 million tons is a very important topic.

Oil prices continue to fluctuate, and oil and gas production benefits and costs are hard to control. The high quality development of oil and gas production enterprises in the new era is challenging under the fluctuating oil price environment. The overlap area between the national natural protection area and the existing oil and gas exploration and mining rights accounts for 26% of the total mineral weight. The withdrawal of the national natural red line and the nature reserve will affect the supply of oil and gas equivalent to 11 million tons of oil and gas equivalent, which has a great impact on the stable production of domestic oil and the production of natural gas.

The Bozhong 19-6 gas field mentioned above is an example. At the beginning of the year, CNOOC said it would realize gas field production by the end of this year. But in the three quarter of the performance press conference, CNOOC CFO Xie Wei Zhi admitted to this reporter, the progress is not as expected.

"Our plan is to carry out pilot production in pilot area in Bozhong 19-6 block this year, because it is a condensate gas field. We hope to find out the law of Qianshan oil and gas reservoir in this way." He said.

Xie Weizhi further indicated that even if the production was put into operation this year, there would be no large-scale production. Its production was only for data for further development. However, the current progress is not ideal. "Because Bohai is a very busy sea area, many units such as transportation, fishing and so on are making use of this area." Xie Weizhi said, "we need to do a lot of coordination work, so there will be some delay in the progress."

With the continuous development of exploration and development business in the upper reaches of China, similar problems may become more and more serious. There is still a lot of road to go for oil and gas production.