CHINA BOOSTING NATURAL GAS E&D, UTILIZATION

China is stepping up efforts to find and use more natural gas.

Beijing's official Xinhua News Agency reported the Ministry of Geology and Mineral Resources' Institute of Petrogeology increased the estimate of China's potential gas resource to 1.4 quadrillion cu ft.

Previous estimates ranged from 918 tcf to 1.16 quadrillion cu ft.

Those estimates exclude a coalbed methane potential resource of 582 tcf, Xinhua reported.

China produced 1.4 bcfd of gas in 1989 (OGJ, Jan. 14, p. 17).

NEW POTENTIAL

Altho ugh most Chinese gas production comes from Sichuan province, explorationists are pressing efforts to find more gas in China's frontier areas.

Garnering increased interest for gas potential is Northwest China's Shaanxi-Ninqxia-Inner Mongolia basin, Xinhua reported.

Gas was first discovered there in 1986, and 43 wells have been drilled in the eastern and central parts of the basin, which covers parts of Inner Mongolia autonomous region and Shaanxi province. Of 24 discovery and extension wells drilled there, half yielded at least 7 MMcfd. The biggest flowed 10.6 MMcfd.

Pay is relatively shallow at 10,500 ft, with the gas of good quality and production relatively uncomplicated, Xinhua reported.

The regional Changqing petroleum administration has formed 10 exploration teams to further delineate the extent of pay there to pave the way for development.

SICHUAN POTENTIAL

Sichuan province accounts for 43% of China's gas flow, producing about 606 MMcfd in 1989, Chen Gengtao reported for China Features, Beijing.

Runnerup Daqing complex produced about 218 MMcfd that year.

With oil production in China concentrated in the Northeast and northern coastal areas, gas provides fuel or feedstock to one third of industrial operations and many residential customers in Sichuan, according to Fan Youzhen, deputy director of Sichuan Oil Administrative Bureau (SOAB). Sichuan is China's most populous province.

SOAB faces the task of ramping up production to meet projected demand in the province during 1991-95, Chen wrote. Early estimates place Sichuan gas demand at 822 MMcfd and provincial production at only 726 MMcfd by 1995.

Sichuan's natural gas resource base is estimated at 282 tcf. However, proved reserves total only 9.9 tcf, reflecting a low level of exploration, Chen wrote.

Modern exploration for gas in Sichuan did not begin until 1949. Since then, SOAB has identified 240 structures, discovered 73 fields, and by yearend 1989 had produced 4.2 tcf of gas.

SICHUAN PRODUCTION

SOAB has five production areas that yield a combined 530-600 MMcfd of gas, Chen wrote.

The southern area, centering on Luzhou, was first to go on stream, and is declining at a rate of 7%/year. Current production is 117 MMcfd.

The southwestern area around Zigong also is in decline, producing about 102 MMcfd.

Efforts are under way to boost production in the northwestern area, around Jiangyou. Production there currently is about 69 MMcfd. SOAB recently discovered a large gas field in Qionglai county west of provincial capital Chengdu.

The central area, around Nanchong, produces mainly crude-2,000 b/d.

The eastern area accounts for more than half of Sichuan's gas flow. Current production is about 318 MMcfd. In 1990, SOAB drilled more than 10 wells there with production of more than 35 MMcfd each. It also discovered two fields in Kaijiang county, with reserves of more than 350 bcf each.

Fan said eastern Sichuan will continue to be SOAB's priority area during 1991-95, potentially offsetting declines in southern and southwestern Sichuan.

As part of that strategy, SOAB built a 328 km gas pipeline from Quxian county in the east to Chengdu in western Sichuan. Completed in July 1990, the line's capacity is 193 MMcfd.

The new line completes a gas grid totaling more than 8,000 km in Sichuan that includes another new line in the north and an existing trunkline that runs from Chengdu to Chongqing, the province's chief industrial center, in the south.

Plans call for increases in gas supplies moved to the south and west from eastern Sichuan.

HIGH COSTS

SOAB must cope with high costs in producing Sichuan gas. In addition to complex geology, the gas is high in sulfur, Chen wrote.

SOAB estimates about half of all Sichuan gas has sulfur contents averaging about 70,000 mg/cu ft.

The bureau has installed six 141 MMcfd desulfurization plants at main pipeline facilities. They recover about 60,000 metric tons/year of sulfur.

In addition, SOAB imported a small modular desulfurization plant from Canada's Delta Projects Inc. at a cost of $4.17 million. Installed near Jiangyou, the new unit has a capacity of 14 MMcfd.

Yu Zhigang, SOAB senior engineer, said Sichuan gas produces mainly from Ordovician carbonates at an average depth of more than 13,000 ft. Drilling costs average 6,560 yuan ($1,263)/ft, and the success ratio is only about 50%, Chen wrote.

SOAB also must grapple with water coning problems.

More than 80% of SOAB's producers have problems with water incursion.

Water has blocked full development of giant Weiyuan gas field, where reserves are estimated at 1.4 tcf. More than 50% of the wells there have been shut in, and production has been cut to only 24.7 MMcfd from a targeted 141 MMcfd.

Except for gas reservoirs with serious water coning problems, average recovery rate in Sichuan fields is 72.5% of proved reserves.

SICHUAN GAS USE

Gas use is growing in Sichuan and neighboring Guizhou and Yunnan provinces, Chen wrote.

SOAB estimates 60% of the gas produced in Sichuan is used as feedstock for chemical fertilizers, mainly urea. The province produces about 10.6 million metric tons/year of standard fertilizer, about half of which is exported to other provinces.

Gas feeds four large fertilizer complexes in Southwest China: two in Sichuan and one each in Guizhou and Yunnan. Capacities are 500,000-660,000 tons/year of urea.

Two more big urea plants, each with capacity of 500,000 tons/year, are under construction in eastern Sichuan. In addition, 76 small and medium sized chemical fertilizers in Sichuan use gas as fuel and feedstock.

Other industrial concerns and residential consumers compete for limited supplies of Sichuan gas, so SOAB has instituted controls on the number of users. About 1 million Sichuan households are hooked up, consuming about 5.6% of the province's gas production.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.