China's shale gas revolution

On October 19, the opening ceremony of the 2012 shale gas prospecting bidding ceremony held by the Ministry of Land and Resources launched 20 blocks with a total area of ​​20002 square kilometers, distributed in Chongqing, Guizhou, Hubei, Hunan, Jiangxi, Zhejiang, Anhui, Henan 8 provinces and cities. This round of tenders received a total of 152 sets of qualified bidding documents for 83 enterprises. The largest of the 20 blocks received 13 sets of bidding documents, and the 19 regional bidders reached three, in line with the relevant provisions of the bidding documents, will enter the public bid opening and The degree of follow-up, as well as one block, due to less than three bidders, did not meet the statutory requirements and will not open the bid. However, it is worth noting that among the 83 bidding companies, private enterprises account for nearly one-third. In fact, from September 10, after the Ministry of Land and Resources officially launched the bidding for the second round of shale gas, successive announcements of listed companies will involve shale gas development. However, in addition to the position that the relevant enterprises will actively participate in the bidding, the blocks targeted are more conservative and have not been announced. Since last year, local governments and central enterprises that have close interests in shale gas development have taken action to set up professional shale gas development companies or introduce large central enterprises and capital to try to take the lead in the development of emerging shale gas. . However, compared with the enthusiasm of enterprises for domestic shale gas development, the academic community has a conservative attitude towards shale gas development. Scholars are concerned about shale gas reserves, costs, development models and environmental protection. This is the “virtual” side that China's shale gas development has to face, and it is concealed in the development boom and shouts. The virtual and real resource competition, the excellent opportunity for private enterprises to obtain upstream oil and gas resources, the entanglement of new and old development systems, the envisaged market prospects, and so on, have been mixed up in the tide of shale gas development. Layout Businesses and local governments have long recognized the opportunities for shale gas development and are striving for opportunities through various channels. The second round of bidding documents, that is, the enterprises that have been transferred to the development must register the company in the province where the resources are located. The “joint and horizontal” of various resource provinces and enterprises has already begun. According to public information, Huadian Group is the most active central enterprise. Hunan Province Shale Gas Development Co., Ltd., which was established by Huadian Group and the Hunan Provincial Government, was unveiled on August 23 with a registered capital of 300 million yuan. Obviously, it is well prepared. Deng Jianling, deputy general manager of Huadian Group, even said at the company's inauguration ceremony: "Ensure that shale gas development in Hunan Province will be vented at the end of this year." Huadian Engineering Company and Guizhou Province established the shale shale gas development limited liability company at the end of last year. Huadian's tentacles also extended to Jiangxi. Jiangxi Province signed a strategic cooperation agreement with Huadian Group in May this year to promote shale gas geological exploration and comprehensive utilization of shale gas resources. Local governments are also unwilling to lag behind, especially in provinces where traditional coal resources are scarce, and shale gas is placed in an important position. In addition to the joint venture with Huadian Group, Hunan Province, led by Hunan Hualing Group, and Huayu Energy Investment Development Co., Ltd., which was established in conjunction with Xiangmei Group and Hunan Development Group, was listed in July this year and is positioned to specialize in shale gas in Hunan Province. Exploration and development work. Jiangxi established Shale Gas Exploration and Development Co., Ltd. in May this year. It is backed by Jiangxi Province Coalfield Geology Bureau, the only unit with gas exploration qualification in Jiangxi Province. It has established the first national shale gas investigation and development research. hospital. At the same time, the Jiangxi Provincial Department of Land and Resources encouraged provincial enterprises to participate in shale gas tendering in public meetings and believed that shale gas has the potential to improve energy structure. Anhui Province and Huaneng Group signed a memorandum of cooperation on the development and utilization of shale gas in August this year, introducing Huaneng. However, the staff of the provincial energy bureau said to the "new industry" that it is only signing a memorandum of cooperation, and more things are still unclear. Regarding the signing of the cooperation memorandum in August, whether the second round of bidding should be dealt with, the person also said that he did not know. On June 26 this year, the State Development and Investment Corporation signed a strategic cooperation framework agreement with Chongqing. SDIC Chongqing Shale Gas Development and Utilization Co., Ltd. was unveiled on the same day. SDIC will invest 30 billion yuan in shale gas exploration and development in Chongqing. In addition to the company's shale gas development limited liability company, the Guizhou Provincial Bureau of Geology and Minerals also formed a joint venture with IDG Capital Investment Consulting Co., Ltd. to focus on shale gas development and technical research. In addition, Shenhua Group and others are also involved in the development of shale gas. The Yanchang Petroleum Yan'an National Terrestrial Shale Gas Demonstration Zone has also been approved by the National Development and Reform Commission with an area of ​​4,000 square kilometers. During the 12th Five-Year Plan period, it has arranged more than 150 billion cubic meters of proven geological reserves and built capacity of 500 million cubic meters. Above the meter. This is the first land-based shale gas demonstration zone approved by the state and the first shale gas demonstration zone. Yanchang Petroleum has previously announced that it has successfully produced terrestrial shale gas wells. According to public information, only the provinces involved in the second round of bidding have little action in Henan, Hubei and Zhejiang. Henan's Henan CBM Company is the first round of bidding for shale gas bidding. Hubei Energy Group has repeatedly reported news about shale gas development. Zhejiang encourages private enterprises to participate in development. However, Professor Zhang Guicai from China University of Petroleum said that the 20 blocks in the eight provinces involved in the second round of bidding were not the most concentrated areas of shale gas, but showed the impulse of the enterprise's “circle resources”. In addition to being widely reported to participate in shale gas exploration and development, among the traditional oil and gas giants, there are still “four small”, that is, Sinochem, CITIC, Zhuhai Zhenzhen, Zhenhua and other enterprises have the desire to obtain oil and gas resources in China. The second round of tenders also opened up for these companies. Obstacles Although the concept of shale gas is hot, there are indeed technical obstacles and lack of experience in China. In view of the current status of shale gas heat, Professor Zhang Guicai summarized it as “the concept of frying and the resources of the circle”. He believes that there is still a long way to go in the commercial development of domestic shale gas. The shale gas revolution in the United States was the envy of Chinese peers. In the past decade, shale gas revolutionized the US energy industry. The United States has become the number one natural gas producer, and natural gas prices have fallen to very low levels. However, the achievements of the US shale gas are not all the achievements of the past decade, and the past decade is only a decade of effects. According to the general statement, the United States has been working in the shale gas field for 30-40 years, and now has achievements. The gap between China and the United States is reflected in technology accumulation and development systems. The “12th Five-Year Plan” for shale gas announced by the National Energy Administration also stated that technological breakthroughs and localization of equipment are the main objectives of the “Twelfth Five-Year Plan”. Shale gas development mainly involves key technologies such as horizontal drilling, multi-stage fracturing and 3D seismic monitoring. According to the reporter, horizontal drilling and multi-stage fracturing technology are also used in the exploitation of traditional oil and gas resources. It is not an insurmountable technical obstacle. China lacks development experience. Liang Zhongcai, a senior petroleum geological engineer of Honghua Group, once said that the development cost of a shale gas well is about 30 million yuan, mainly using foreign fracturing equipment, which increases the cost. Zhang Guicai believes that because shale gas has not entered large-scale mining, the cost of using foreign equipment will be high. As the scale of development expands, domestic companies of horizontal drilling and fracturing equipment can produce and compress this part of the cost. However, he believes that the only thing that cannot be broken in China in the short term is the 3D seismic monitoring technology. In addition to technology, institutional reasons are more worrying in the industry. There were more than 1,700 companies engaged in shale gas development in the United States before the 1980s, and more than 200 recently. It is the continued competition and technological breakthroughs of many companies that contributed to the success of the US shale gas revolution. In contrast, there is no such institutional factor in China, and traditional oil and gas is only involved in several major oil companies. SMEs are unable to obtain mineral rights to enter the upstream of oil and gas exploration. Previously, experts suggested implementing a new system in shale gas mining to attract more companies to enter. However, so far, in addition to the introduction of competition mechanisms in tenders and the establishment of demonstration zones, there are no signs of establishing newer shale gas development mechanisms. Shale gas development is also subject to gas pipelines. Liang Zhongcai said that due to the gas pipeline, there will be no big jump in the near future. At present, China's gas pipelines are basically in the hands of PetroChina, and Sinopec only has Sichuan-East Gas Pipeline and coal-to-gas pipelines. A well-established pipe network and flexible pipe network operation mechanism are also a reason for the successful development of shale gas in the United States. China's pipe network is still not perfect, and it is also dominated by a few oil giants. Natural gas price reform piloted a more market-based price formation mechanism in Guangdong and Guangxi at the end of last year, but the method of defining transportation costs is still not clear enough, and it has become a problem for shale gas development. Zhang Dawei, director of the Resource Reserves Evaluation Center of the Ministry of Land and Resources, revealed that the local government has been planning to communicate with the company to the price of the network. Local governments will also make a difference in the construction of gas pipelines. However, according to the information that the reporter learned from the local, although the construction of the local pipe network is based on the “gasification” strategy of the express train, the construction period is long, and more is the construction of the urban pipe network, not to match the shale gas. These factors are all problems that need to be faced in the large-scale development of shale gas. Perhaps after the resolution, we can see the prospect of China's shale gas. Economic Benefits The economic benefits of shale gas development are of concern to the industry, as large-scale commercial mining has not yet begun and there are many controversies. The Ministry of Land and Resources stipulates that the shale gas prospecting right is valid for 3 years, and the annual average survey investment should reach 30,000 yuan per square kilometer. The minimum amount of drilling work such as pre-exploration wells drilled to the target layer should meet two per 500 square kilometers. The 20 blocks in the second round of bidding average one block of 1000 square kilometers, and each block needs a minimum investment of 30 million. According to Liang Zhongcai's estimate, the cost of a shale gas well is about 30 million yuan. The minimum amount of drilling work such as pre-exploration wells drilled to the target level should meet two per 500 square kilometers, and each block needs to invest more than 100 million yuan. There are currently more than 60 resource evaluation wells in China, and a few wells produce industrial airflow. Zhang Guicai explained that the shale gas wells currently being produced have not found a shale gas field and cannot be developed on a large scale. This means that on the one hand, the shale gas reserves data based on the resource evaluation wells are inaccurate, and on the other hand, the costs and benefits can only be calculated by a single well. This is also a problem that enterprises entering shale gas development need to pay attention to, that is, they face the result that there is only dry gas in the block without airflow, industrial airflow, but no integrated gas field. Of course, according to the current domestic natural gas price, once the industrial gas flow is seen, it is economical to calculate by single well. However, Zhang Guicai repeatedly stressed that shale gas is suitable for small-scale development of the local area and is not suitable for large-scale mining of large enterprises. He believes that small-scale mining can be digested on the spot and transformed into the profits of development enterprises in the current situation of imperfect pipeline network and unclear resource prospects, and realize the shale gas rolling development. However, this obviously does not apply to central enterprises and private enterprises that are eager to enter shale gas development. Central enterprises can promote the linkage of related industries, such as power generation, and private enterprises have thus entered the upstream of oil and gas exploration and achieved breakthroughs. A person familiar with the matter also revealed that shale gas development cannot calculate cost benefits in a completely market-based manner. Shale gas development is at an early stage in China, and the energy sector is working with the finance department to develop fiscal and tax incentives for shale gas mining. . According to informed sources, preferential policies may be extremely favorable to attract more companies to enter. Taking off exploration and development, a shale gas expert from Huadian Group said that the exploration and development of shale gas will undoubtedly promote the development of related drilling equipment, fracturing equipment and other related industries, and these industries will see benefits in the short term. The shale gas-related industry is a beneficiary in the capital market, which may be why listed companies have announced that they will be involved in shale gas development through announcements. However, overall, talking about economic benefits is also on paper. As shale gas enters the practice chain, the virtual reality will be presented to the public. Prior to this, more companies were stunned and spectators.

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