Shale Gas Exploration —— Three Years, Three Great Changes

Marine Facies in

South China

Tarim

Marine Facies

（Large burial

depth）

South China Marine-

Continental Facies

East Fault Depression

Continental Facies

（Low thermal Evolution, poor

fracturing ability）

complex structure, poor

preservation condition,

high thermal evolution

Sichuan Basin

Sichuan Basin

Southeast of Sichuan

Limited by technology

and cost, commercial

development is difficult

to realize

Breakthrough of marine

shale gas exploration in

Jiaoshiba, Fuling

Feb. 2012, Well Jiaoye 1-HF was drilled according to the plan of Silurian Longmaxi Formation in

Jiaoshiba, Fuling. Horizontal length is 1007.9m, with 15 stages through large-scale hydraulic

fracturing.

Nov. 28, 2012, shale gas production was 20.3×104 m3/D, realizing a great breakthrough of shale

gas exploration in Sinopec. Jan. 9, 2013, commercial trial-produce started with a daily production

of 6×104 m3, which marked Fuling shale gas reservoir entering its official commercial trial

production.

2010-2011 2011-2012 2009-2010

Jan, 2013, made strategic plans on evaluation

of production test wells, achieving annual

shale gas production of 0.5 billion m3;

Mar. 2014, Sinopec announced Fuling shale

gas play entered commercial production phase

ahead of time, becoming the first to get a great

breakthrough in shale gas exploration;

From 2014 to 2015, affirmed by Ministry of

Land and Resources twice through evaluation

that Fuling shale gas had 380.6 billion m3

cumulative proved reserves, 383.54 km2 gas

bearing area;

2015, construction of Fuling National Shale

Gas Demonstration Reservoir passed

inspections, which marked Fuling shale gas

play was accepted as a national shale gas

demonstration area.

Shale Gas Development ——Constructed Fuling Shale Gas

Demonstration Reservoir in Chongqing for Three Years

Shale gas formation in Jiaoshiba Fuling area showed electrical properties including

high Gama, high sonic wave and low porosity. The formation was typical superior

deep sea shelf facies mud shale. Carbon isotope comparison indicated the shale gas

was sourced from Wulong-Longmaxi formation, self-generated and self-stored with a

large reservoir thickness, high gas content and stable distribution.

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钻井液密度1 2g/cm

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气测全烃0 10%

AC120 40μs/ft

CNL60 -20%

DEN2.1 3.1g/cm

3

RD1 1000Ω·M

RS1 1000Ω·M

取心

位置

岩性深度(m)

GR0 250API

KTH0 250API

分层

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钻井液密度1 2g/cm

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气测全烃0 10%

AC120 40μs/ft

CNL60 -20%

DEN2.1 3.1g/cm

3

RD1 1000Ω·M

RS1 1000Ω·M

取心

位置

岩性深度(m)

GR0 250API

KTH0 250API

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钻井液密度1 2g/cm

3

气测全烃0 10%

AC120 40μs/ft

CNL60 -20%

DEN2.1 3.1g/cm

3

RD1 1000Ω·M

RS1 1000Ω·M

取心

位置

岩性深度(m)

GR0 250API

KTH0 250API

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钻井液密度1 2g/cm

3

气测全烃0 10%

AC120 40μs/ft

CNL60 -20%

DEN2.1 3.1g/cm

3

RD1 1000Ω·M

RS1 1000Ω·M

取心

位置

岩性深度(m)

GR0 250API

KTH0 250API

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钻井液密度1 2g/cm

3

气测全烃0 10%

AC120 40μs/ft

CNL60 -20%

DEN2.1 3.1g/cm

3

LLD1 1000Ω·M

LLS1 1000Ω·M

取心位置

岩性剖面

深度(m)

GR0 250API

KTH0 250API

分层

Fuling Shale Gas Field——A Typical Superior Marine

Shale Gas Reservoir

Gas production showed Fuling marine shale gas was superior with “Two High, Two

Good” characteristics (high formation pressure, good natural gas components, good

single well trial production effect and high production). Shale gas components were

mainly CH4 with an average content of 98.27%, the total content of hydrocarbon was

99%, with no poisonous gas such as H2S and CO，etc., thus the shale gas was a

high-quality clean energy.

——High Gas Production Per Well and

Good Gas Components

Cumulative Gas Production

Jiaoye 6-2HF: 0.2 billion m3

Jiaoye 1HF: 76 million m3

Histogram of average content of shale gas

components in Longmaxi Formation, Jiaoshiba area

CH

4

C2 H

6

C3 H

8

C4 H

10

Iso

-C4 H

10

C5 H

12

Iso

-C5 H

12

CO

2

He

N2

H2 S

H2

Co

mp

on

en

t

10 samples of Well Jiaoye 1HF and 1-3HF

Production Date(month)

Mo

nth

ly G

as p

rod

uctio

n(M

illio

n m

3)

Haynesville(11.9nm nozzle)

Haynesville(5.6 nozzle)

Jiaoye 6-2HF(large pressure drop)

Jiaoye 1HF( constant production rate)

From Nov. 8, 2015, there were 165 producing wells in Fuling Shale Gas Play, daily gas

production was more than 15 million m3. On Dec. 29, 2015, Sinopec announced the first

national shale gas demonstration area —— the first productivity construction stage of

Sinopec Chongqing Fuling national shale gas demonstration area was completed.

Jiaoye Platform 1

Qingshan Drill Rig Last gas transportation station at Baitao

Large Scale Hydraulic Fracturing

—Achieved 5 Billion m3 Annual Shale Gas Production in Advance

June 2014, China’s Ministry of Land

and Resources established

Chongqing Fuling shale gas

exploration and development

demonstration base.

Sep. 2013, the National Energy

Administration approved the

establishment of Chongqing Fuling

National Shale Gas Demonstration Area

April 2014, the People’s Government

of Chongqing province awarded well

Jiaoye 1HF as the Exploit Well of

Shale Gas Development.

Nov. 2014, the 5th World Shale Oil and

Gas Summit granted “International

Shale Oil and Gas Pioneer” award to

Sinopec.

Chongqing Fuling National Shale Gas Demonstration Area——

The high-level, high-speed and high-quality construction is a successful example of

China’s shale gas exploration and development in areas including theory, technology and

management innovation. It’s a role model for China’s shale gas exploration and production,

which significantly increases confidence in the development of shale gas industry, and also

shows a beautiful prospect in this area. At the same time, a series of world well-known

accomplishments has been achieved during its production construction.

——From National Energy Administration experts responsible for the Demonstration Area inspections

1. Created the Marine Shale Gas Exploration Theory

and Series of Development Technologies

Created shale gas enrichment theory, built a marine shale gas evaluation

system and standard —— “shale quality is the basis, preserve condition is

critical, and economic efficiency is the purpose”.

——Through systematic comparative study of

outcrops and core data, we found deep-water

shelf shale was the most favorable facies to shale

gas production, preservation and fracturing. It

was the basis of hydrocarbon generation and

preservation control.

——By analyzing reasons for the early drilling

failure in superior shale, preservation conditions

are considered to determine the shale gas

enrichment and distribution. Good preservation

conditions are the key to reservoir forming and

production control.

Thickness contour map

of high-quality shale in

Sichuan Basin and its

peripheral Wufeng-

Longmaxi Formations

Thickness contour map

of high-quality shale in

Sichuan Basin and its

peripheral lower

Cambrian Niutitang

Formation bottom

Com

pre

hen

sive

asse

ssm

ent

tech

nolo

gy o

f sh

ale

gas

res

ervoir

Anisotropy description technology

for porous structure of shale

Well-logging evaluation technology

for shale-layer

Comprehensive geological assessment

technology for desert area development

Technology for optimizing &

designing shale gas development

Production assessment of well

technology

Shale gas prediction technology through

geological physics

……

Fas

t &

hig

h q

ual

ity h

ori

zon

tal

wel

l

dri

llin

g t

ech

nolo

gy

Superficial karst cave and fracture

prediction technology

Drilling design optimization

technology

Speeding-up technique based on “Vertical section

+ Directional section + horizontal section”

Localization technology for oil-

based drilling fluid

Cementing technology of long horizontal-section

well under oil-based drilling condition

Remote online transmission with geology tracking

and orientating technology while drilling

…… Gas

tes

t te

chn

olo

gy f

or

lon

g h

ori

zon

tal

wel

l

stag

ed f

ract

uri

ng

Standard staged fracturing

designing technology

Differentiation staged fracturing process

parameters optimization technology

Independent developed effective

fracturing material system

Pumping bridge plug +

perforation technology

Long horizontal-section coiled

tubing drilling technology

……

Pre

-pro

duct

ion &

dev

elo

pm

en

t

suppo

rtin

g t

echno

log

y

Microseismic monitoring

technology

Fracturing tracer monitoring

technology

Well completion operation under

high pressure

Coiled tubing completion

technology

Gas producing profile technology

based on fluid scanning imaging

……

En

vir

on

men

tal d

evel

op

men

t

sup

port

ing tec

hn

olo

gy

Land conservation through

cluster wells arrangements

Prevention of water pollution &

recycle utilization

Prevention of air pollution

Solid waste treatment for

environment protection

Prevention of noise pollution

……

Innovations have effectively broken through the technical bottlenecks of shale gas

exploration and development. Five technical systems adapted to Fuling Marine shale

gas characteristics were founded, which laid a firm theoretical and technical basis

for the large-scale shale gas exploration and development.

Created a “Well Factory” production

management pattern: reduced time period of

drilling and fracturing by 40% compared

with the initial phase.

“Well Factory”drilling site of Jiaoye

30 platform with Wheel-rail rig

“Well Factory” fracturing site of Jiaoye 42 platform

2. Established a replicable and propagable

shale gas development model

5000m step

drilling rig Rig base Moving system

Innovated a “Four Modernizations” construction mode: “standardized

design, standardized procurement, modularized construction, informationized

improvement” ground construction mode to achieve factory prefabrication ,

modular skid, skid-setup and digital management of shale gas ground

gathering and transportation system, and to establish a high-efficiency shale

gas field development and construction model.

Established a oil company model using "Market-oriented Operation

and Project-based Management "as the core, realized optimal

resources allocation worldwide, constantly reduced the development

cost. For a single well, the investment has been reduced by 20%

compared with the early investment.

3. Created a proper industrialized mode for shale gas

effective development and construction

Cooperation Company

Drilling Gas testing Well Logging Technical Services

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.

Achieved the key equipment and supporting tools domestication,

brought large quantities into the field application, provided a strong

support for China’s shale gas rapid development.

Drill bit and PDM drill

assembly

4. Achieved the domestication of critical

technology and equipment

3000-type fracturing trucks strongly

support large-scale fracturing

Coiled tubing equipment

Drillable bridge plug

Strictly follow “Law of Production Safety”, “Law of Environmental Protection”,

safety assessment, environment assessment, occupation health

evaluation, ,maintain water scheme, earthquake safety, etc. Obtain government

approval before starting any implementation.

5. Achieved a safe and green shale gas development

Chairman of the board of supervisors

from State Council Liu Yi(third form left)

On-site inspection

Investigator from National Environmental

Protection Department (second from right)

On-site inspection

Deputy director of the Southwest

Supervision Center

from Ministry of Environmental

Protection Yang Weimin(third from left)

On-site inspection

Established a strict “Four in One” three-dimensional supervision system. Set up a

monitoring mechanism combining company, the third party, government and society to

24/7 monitor the whole process from all aspects including key operation steps (drilling,

measuring, recording, fracturing, gas testing) and vital parts, thus ensured all types of risk

under real-time control.

Compiled the Fuling shale gas field development environment monitoring programs, set

up 78 environment normalization monitoring sites, carried out background values

monitoring, routine and emergency monitor surface water, underground water, air, noise,

soil and other values. Since 2014, more than 10,000 monitoring data has been obtained,

showing development of Fuling shale gas did not affect or change the local environment.

Reduced fresh water consumption:

optimizing drilling and the design of

gas test construction reduced water

consumption per well by 12%.

Recycled waste water: reusing well-

processed waste drilling water,

fracturing flowback, water produced

with gas in hydraulic fracturing

achieved zero emissions.

Completed the technical support system. Implemented the “reduction-reuse-

recycle” economic model. By improving and optimizing design, using clean

energy and raw materials, taking advanced technology and equipment, as well

as integrated utilization, clean production was guaranteed during the whole

process.

Strictly prevented and controlled air pollution

Drilling: replaced diesel-powered drill rig with electric

net one, reducing energy consumption and waste gas

emissions.

Gas Testing：improved the process of gas testing and

flowing into the metering station, minimized the open

flow time. “Shale gas ground flowing test system” was

accepted as the National Utility Model Patent.

Gas Production：used a closed gas gathering and

transportation process, effectively avoided methane

emissions.

Strictly regulated and disposed solid waste

Established an emergency security system. Set up the emergency rescue center,

equipped with fire control, medical care and other emergency rescue professionals and

supplies; Founded the “security protection of shale gas development committee "with

local government in Fuling, strengthened cooperation with departments including local

police, fire, health and environmental monitoring, ect., to build a joint management

mechanism; Completed emergency plans to get “one well, one case; one station, one case;

one project, one case”.

Implemented the “cluster wells” design, “standardized” construction and

other intensive land use measures, strictly carried out land reclamation

programs to save land acquisition area more than 30%, restored ecology and

protected our beautiful homeland.

“Cluster Wells” design

There are 4-8 wells on one platform, saving more than 30%

land acquisition area.

“Parent Well and Infill Well” Mode

Using the existing resources from the old platform to maximize

the well site combination, without constructing new platform,

thus reducing the land occupation and construction investment.

Sinopec signed the “Fuling Shale Gas Development and Utilization Strategic

Cooperation Agreement” with the local government, established the shale gas

joint venture, made high-level coordination and decision-making mechanisms

and monthly joint meeting system, integrated enterprise development and

government coordination and services, and explored new mode of cooperation.

6. Created a win-win model of enterprises cooperation

Governments at different levels in Fuling, Chongqing set up energy

construction leading group, creating a good environment for gas field

construction.

Fulfilled social responsibility, actively participated in local public facilities

and welfare construction, took shale gas development as a link, effectively

promoted local employment, strongly supported local economy and society

development, thus, shared the win-win achievement with local people.

Participated in Jiaoshiba Town road construction

Brought stationery for Fuling primary

school

Brought best Spring Festival wishes to

local people

Sent out and explain popular

science handbook

Sinopec and Chongqing jointly opened the

Fuling-East shale gas transmission valve

7. Gradually Emerging Social Benefits.

Strongly promoted the adjustment and optimization of China’s energy

structure. Among the primary energies, natural gas consumption in China

is only 5.5%, far below the world average level 24% of the same period.

June 2015, through Sinopec Sichuan-East Gas Transmission pipeline,

Fuling shale gas was transported to central, eastern and southern China,

thus became a “great fortune” boosting the green development of

Chongqing and even cities along the line.

Established strategic partnership

with local enterprises such as

Chongqing Xinyu Corporation.

Hiring local labor Gas transportation to the

Jianfeng Chemical

Corporation

Promoted local economic development and benefited the local people.

8,000 people were involved in shale gas development in Jiaoshi town with

less than 3,000 indigenes, which greatly promoted the rapid development of

local catering industry, retail trade, hotels and other service industries.

According to statistics from the local government, Fuling shale gas has

brought a 1.5 % GDP growth in Fuling.

Greatly promoted energy conservation and emission control, improved

the environment. The completion of 5 billion m3 Fuling shale gas cumulative

production cut 6 million tons carbon dioxide emissions annually, the

equivalent of planting almost 55 million trees and nearly 4 million economy

cars closed for a year. While reducing 150,000 tons of sulfur dioxide and

50,000 tons of nitrogen oxide emissions, the produced shale gas could

meet the daily gas demand for 32 million families.

Dec. 29, 2015, Sinopec announced the construction of 2nd 5 billion

m3/year shale gas production in Fuling officially started.

Sinopec will adhere to a general idea “well manage the first stage, well

construct the second stage and prepare for the third stage” , follow “deploy as

a whole, implement by steps, integrate evaluation and construction,

optimization and adjustment” principle and “high-level, high speed, high

quality and high efficiency” standard, and spare no effort on building a green,

efficient, exemplary, sunny, harmony and cultural gas field.

30

Gas Testing Shows:

WeiYe 1HF daily produced 175 thousand m3

shale gas from its Silurian Longmaxi Formation;

Yongye 1HF daily produced 50 thousand m3

shale gas from its Silurian Longmaxi Formation;

JinYe-1HF daily produced 84 thousand m3 shale

gas from its Cambrian Qiongzhusi Formation.

Shale gas commercial discovery

in southern Sichuan

彭水 南川

丁山

荣昌-永川 威远-荣县

井研-犍为

美姑-五指山

Southestern

Sichuan Southwestern

Sichuan

Fuling Jiaoshi

林滩场

Southern

Sichuan

Longye 1HF daily produced 57.5 thousand

m3 shale gas from its Silurian Longmaxi

Formation;

Dingye 2HF daily produced 40-100

thousand m3 shale gas from its Silurian

Longmaxi Formation.

Shale gas development breakthrough

in southeastern Sichuan

Key Shale Gas Exploration Area in Sichuan Basin

8. New Progress of Shale Gas Exploration in Sichuan Basin

Wish Sino-US 2nd phase shale

gas training a great success!

Thank you!