CNPC taps new gas reservoir

China National Petroleum Corp workers at a natural gas terminal in Nantong, Jiangsu province. Provided to China Daily

Sichuan project expected to help secure nation's energy supply, meet demand

China National Petroleum Corp started drilling its most recent natural gas discovery in Sichuan province on Friday, a project that will help ensure the country's energy supply.

The reservoir is located in the Longwangmiao formation of the Cambrian system in the Moxi block of the Anyue gas field. It represents a major breakthrough by the company, the nation's largest oil and natural gas producer, in natural gas exploration.

Yang Yu, a geologist who works for a CNPC subsidiary, said the discovery of the Longwangmiao reservoir proved that China still has huge potential in conventional natural gas exploration.

"Our proprietary technology helped the company make a breakthrough", said Yang.

The subsidiary, PetroChina Southwest Oil and Gasfield Co, has already developed a project in the block with an annual output of 1 billion cubic meters.

Li Luguang, general manager of the subsidiary, said the company expects to produce 11 bcm of gas annually by end-2015.

That's equivalent to the annual volume of gas imports from Myanmar, and it's also enough to supply Beijing for a year, according to Wang Xiaokun, an energy analyst at consultancy Sublime China Information.

As China strives to cut carbon emissions and raise the proportion of clean fuel in its primary energy mix, natural gas consumption has continued to rise - along with dependency on imports.

Natural gas imports rose 25 percent in 2013 to 53 bcm, and they're expected to expand another 18.9 percent this year to 63 bcm, according to the CNPC Economics and Technology Research Institute.

China used 169 bcm of natural gas in 2013, according to the National Development and Reform Commission.

The latest find in Sichuan "will help ease China's natural gas supply shortage in the long run," said Liu Yijun, a professor at the China University of Petroleum.

Based on the current development plan, the field's output will be able to satisfy one-third of new domestic demand in coming years.

"Meanwhile, China will have an advantage during natural gas import negotiations with other countries, including Russia," he said. "China will be able to wait for the right time [to buy overseas] when we have such a big proven reserve."

The reservoir has proven geological reserves of 440.38 bcm of natural gas, with technically recoverable reserves of 308.2 bcm, as certified by the Ministry of Land and Resources.

Last year, China's new proven geological natural gas reserves reached 616.43 bcm, with the Longwangmiao find accounting for 71.4 percent of the total, according to the ministry.

PetroChina Southwest is working on a project with an annual production capacity of 4 bcm. The company also has started preliminary work on the second phase of the project, which will have a capacity of 6 bcm.

"It is the biggest natural gas capacity building project in the Sichuan Basin, one of China's richest natural gas producing regions," said Li.

"When the project is completed, it will help accelerate the environmental and economic development of the region and reduce air pollution," said Li.

Natural gas accounts for 15 percent of the primary energy mix in the Sichuan Basin area, well above the national level.

China's natural gas consumption accounted for 5.9 percent of the primary energy mix, far behind the levels in developed countries.