China National Petroleum Corp.'s key oil and gas strike at 1 Tazhong in the Tarim basin of Northwest China presents the country with major challenges.
The discovery, on China's largest known subsurface structure, caps a long history of exploration in the remote Tarim basin.
Chinese geologists believe Tarim basin reserves may be 74 billion bbl of oil and 282 tcf of gas, respectively one seventh and one quarter of the national total.
The 3,160 sq mile Tazhong structure, in the central Taklimakan desert of the Xinjiang Uygur Autonomous Region, is nearly three times as large as the largest structure at Daqing, China's largest oil field.
Covering 216,000 sq miles, Tarim is China's largest continental sedimentary basin. About 127,000 sq miles of the basin is desert (see map, OGJ, July 24, 1989, p. 19).
The basin is economically underdeveloped and sparsely populated. It has only one rail link to the rest of China. Yet its exploitation is first on the Chinese oil industry's agenda, Wang Tao, CNPC general manager, told Pu Fanqi of China Features, Beijing.
Some smaller fields in the northern Tarim basin may be brought on production during the next few years. Combined production could rank third in China by 1995, Pu wrote.
China produced 2.68 million b/d of oil in 1987, 2.74 million b/d in 1988, and hoped to produce 2.8 million b/d in 1989.
Such a moderate growth rate must be sustained if widespread shortages are to be avoided, but production is declining in all major fields except Zhongyuan.
Daqing field produces 1 million b/d of oil, but water accounts for 75% of well fluids on average.
TARIM EXPLORATION
Tarim basin is the world's largest basin not fully explored for oil, says Qiu Zhongjian, a CNPC executive in charge of its exploration and development.
China conducted mostly surface geological surveys in the basin during 1952-62, mainly on the northern and southwestern flanks, and drilled some shallow structures.
Explorers discovered Yiqikelike oil field in Kuche County in the north in October 1958.
Peak production was 1,720 b/d.
Focus shifted to the desert rim in 1963-78, when comprehensive geophysical surveys were conducted and some deep structures delineated.
Kekeya oil field was discovered in May 1977 in Yiecheng County in the southwest.
The field, with reserves of 250 million bbl of oil and 1.02 tcf of gas, feeds three petrochemical plants.
Desert exploration started at the end of the 1970s, fueled by China's rising oil demand and open door policy that allowed imports of advanced technology and equipment.
The government decided in 1978 to step up oil exploration in the basin.
Three foreign and seven Chinese seismic crews have completed 19 transdesert seismic lines and reexamined previous data from the basin's rim, delineating several big structures.
RECENT EFFORTS
CNPC and the Ministry of Geology and Mineral Resources drilled exploratory wells on some of the most promising structures in the northern part of the basin in the mid-1980s.
The unmatched success of 1 Tazhong has led CNPC to invest more than $405 million in exploration in the basin in 1989 and 1990. Investment through 1988 was $810 million. The discovery flowed 3,623 b/d of light, sweet crude and 12.7 MMcfd of gas Oct. 31 from 384 ft of marine carbonates (OGJ, Nov. 27, 1989, p. 18).
Depth at the time was 12,139 ft. Drilling has resumed to target depth 19,680 ft. CNPC geologists believe the well may produce more than 7,300 b/d of oil.
The number of rigs deployed in the basin is expected to rise from more than 20 to 50-60 by yearend 1990.
In other successes in recent years, the 2 Shashen well led to discovery of Yakela field Sept. 22, 1984, flowing oil and gas at high rates from Ordovician pay.
The 1 Lunnan and 2 Lunnan wells, drilled in September 1987 and November 1988, also flowed at high rates. Then 3 Lunnan and 18 Sha registered large oil and gas flows in August and September 1989.
CNPC, responsible for overall planning, has set up the Tarim Basin Oil Exploration and Development Bureau. The Ministry of Geology also has set up a command to coordinate its operations in the basin.
HYDROCARBON POTENTIAL
Conditions are ideal for oil generation in the Tarim basin, which abounds with large and superlarge structures, Pu wrote for China Features.
Geologists have identified 48 structures suitable for hydrocarbon entrapment. Of those, 35 are larger than 39 sq miles and four are larger than 390 sq miles.
Rich marine sediments cover the entire area, and marine source rocks average 13,000-29,500 ft in depth. Triassic, Jurassic, and Cretaceous aged zones are especially suited to trap oil.
Geologists earlier suspected that high temperatures might have turned oil into gas because of the great depths. However, exploratory drilling has revealed a temperature gradient of 1.7-1.9 C./100 m, about half the gradient in major oil fields of eastern China.
CNPC plans to drill experimental development wells near the 2 Lunnan exploratory well to test various development techniques because geological conditions in the basin are dramatically different from those in other Chinese oil fields.
LOGISTICS, FUNDING
Lack of transportation and communication is a serious obstacle to Tarim basin development. Only one rail line with limited capacity links the Lanzhou-Xinjiang trunk line with Korla, base for the exploration and development bureau.
Logistic support for drillsites is even more difficult. All personnel and supplies are moved by air at present.
There are three options to move oil when fields are developed: expanded rail capacity, cross-desert highway, or long distance pipeline.
Most officials favor a pipeline to Luoyang city in Henan Province of Central China, a distance of almost 1,500 miles. From Luoyang, existing pipelines could move the oil to the port of Lianyungang.
Funding is another major problem. CNPC hopes to keep a substantial share of the profits from oil production for reinvestment in the basin. The State Council, China's cabinet, accepts CNPC's proposals in principle.
CNPC hopes to prove 1.5 billion bbl of oil reserves. That could be enough to prompt the government to invest further human and financial resources from outside the industry in the basin.
China is not likely to open. the basin to direct foreign participation, but outside companies may find excellent opportunities to sell technology, expertise, equipment, and services, Pu reported.
Halliburton Geophysical Service Inc. has been working in the desert with CNPC since June 1983.
More than 20 technicians from the U.S., Britain, Canada, and Australia are under contract in the basin on jobs ranging from data analysis and mud preparation to operation and maintenance of meters and other equipment.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.