Sinopec will increase Bohai Bay Shale Oil as a backup to maintain output

Sinopec, the Chinese oil company, will increase shale oil production in the Bohai Bay basin following a successful pilot. The resources gained from this project will be used to sustain oil production for a longer period of time, according to its chairman.

Sinopec has pumped 7.3 million barrels of oil (or close to one million metric tonnes) from the Jiyang Trough in the basin, which is part of Shengli Field, an old field. This was the first of Sinopec's major shale-oil pilot projects.

Hou Qijun, chairman of Sinopec, told reporters at a Monday media briefing that shale?oil has a huge potential. Next, we'll?accelerate the exploration and production of shale-oil resources by combining technology innovations with capacity building.

SINOPEC WILL? EXPAND HORIZONTAL Drilling

Hou, the CEO of Sinopec, said that Sinopec would expand horizontal drilling and, in particular,?the?multi-layer, three-dimensional? development, unique to China's shale industries.

He added that the oil resources of the Bohai Basin are comparable with those in the Permian Basin, which is located in the United States.

The basin includes the offshore Bohai oil field, which is now China's largest and most productive. It also covers several other important onshore fields, such as Shengli Liaohe Huabei.

Hou said that the key to reducing the costs was to improve the engineering technology. He did not provide any?details on the?costs associated with shale oil.

S&P Global Energy analysts estimate that the full-cycle cost of China's shales?oil is between $45 and $90.00 per barrel. This is higher and more variable than what you would pay in the United States.

Rystad Energy, a consultancy, predicts that China's shale?oil?output will double to 120 mln barrels by 2035. This would represent 8% of the country's output. Sinopec is exploring more pilot projects. (Reporting and editing by Clarence Fernandez; Chen Aizhu)

(source: Reuters)