CHINA E&D ACTION ACCENTS REMOTE NORTHWEST

Halliburton Co., Dallas, has signed a letter of intent with China National Petroleum Corp. (CNPC) for a possible joint venture company to provide exploration and development services in Northwest China.

The letter also calls for Halliburton to provide CNPC technical assistance for a prefeasibility study for a possible crude oil pipeline from western China to the eastern part of the country.

Lack of infrastructure has been a major obstacle to expanded E&D in the remote Tarim and Turpan basins of Northwest China.

Industry officials have estimated a 1,500 mile pipeline costing more than $1 billion would be needed to bring Northwest China crude to market.

Such a line could span more than 1,800 miles from fields in the western Tarim basin to consuming centers in and around Beijing.

Technical services under consideration for the joint venture company include cementing, stimulation, logging, and well testing.

In other Northwest China oil developments, Xinhua News Agency reported:

• Officials are targeting a jump in production in the Junggar basin's Karamay area by about 54% to 200,000 b/d by 2000.

• Production is ramping up toward a yearend target of 20,000 b/d in the Tarim basin.

• Factories in Lanzhou, capital of Gansu Province, report a surge in orders for oil field equipment because of stepped up exploration and development in Northwest China. A Lanzhou drilling rig manufacturer has received orders for 35 rigs this spring alone-almost triple its total orders for all of 1990. Lanzhou Institute of Petroleum Machinery is pressing research on drilling problems encountered in the remote deserts of the Xinjiang Uygur Autonomous Region.

In addition, many large oil field equipment suppliers and research companies are opening offices in Lanzhou, where almost half of China's oil equipment is manufactured.

KARAMAY AREA

An aggressive program of workovers, enhanced recovery, and new pool development has boosted production in the Karamay producing area of Xinjiang Uygur Autonomous Region.

During 1986-90, Karamay oil production increased by 28.7%, or 36,000 b/d.

In 1990 Karamay production averaged 130,410 b/d. Its net production increase accounted for 63% of China's oil production growth of almost 28,000 b/d last year.

In 1990, the Xinjiang Petroleum Administration (XPA) conducted 9,100 well stimulation operations in Karamay field, resulting in an incremental production increase of 12,800 b/d.

Also contributing to the 1990 production increase was an expanded program of steam injection to recover heavy crudes in the Karamay area.

Production from deeper pay, new pool discoveries also helped offset production declines in the Karamay area,

In the mid-1980s, XPA and France's Cie. General de Geophysique conducted seismic surveys that resulted in identification of large Carboniferous and Cretaceous-Jurassic structures at about 16,000 ft.

Drilling confirmed an oil resource XPA estimates could ultimately double today's Karamay reserves. Initial production from the new pool strikes in Karamay averaged 18,500 b/d in 1990.

Karamay production started in October 1955, but output began to decline in the mid-1970s.

During the last 10 years XPA and 20 Chinese research institutes and colleges have been working on ways to improve Karamay well performance. Out of that research and the importation of foreign technology, XPA has implemented advanced techniques in acidizing, hydraulic fracturing, water injection, steam injection, and workovers.

Chinese officials hope to use the Karamay experience as a model for maintaining or increasing production in China's other mature oil producing areas.

TARIM BASIN

Qui Zhongjian, deputy general manager of China Oil & Gas Corp., estimated Tarim production from a pilot development in southern Luntai County at 9,690 b/d from 23 wells.

That's almost halfway to the yearend target for the remote basin announced last year (OGJ, Oct. 15, 1990, p. 27).

Large scale exploration in the Tarim basin got under way in 1989.

Qui said his company has organized 15,000 workers into 26 seismic teams and 46 drilling teams to continue work in the basin.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.