Royal Dutch Shell and CNPC Set Up Global Alliance
Royal Dutch Shell Plc and China National Petroleum Corp. have agreed to set up a venture to drill onshore gas wells more efficiently in the world’s largest energy-consuming nation.
The partners will have equal shares in a well manufacturing venture and will deploy “state-of-the-art technologies,” such as automated directional drilling and optimization, some of which were “pioneered by Shell in its North America tight gas operations.”
The venture forms part of a Global Alliance Agreement announced between the largest European and Asian oil companies to establish cooperation opportunities in China and abroad.
“CNPC and Shell are collaborating in a variety of projects globally with the aim of investing for profitable growth, and to meet the world’s growing demand for cleaner, affordable energy,” said Peter Voser, CEO of Shell. “The Shareholders Agreement for the Well Manufacturing JV underscores how Shell and CNPC are working together to develop gas resources using innovative and cost competitive technologies.”
China’s shale gas deposits may hold 12 times more fuel than its conventional fields, the U.S. Department of Energy estimated in April. China needs to develop drilling technologies to repeat the transformation of gas production in the U.S., as a result of growing shale gas production.
“Full scale commercialization of tight gas, shale gas and coal bed methane can require the drilling of hundreds of wells each year, over many years,” Shell said.
In March 2010, Shell and CNPC announced plans to jointly develop and produce tight gas reservoirs in China's Sichuan Basin, submitting a production sharing contract to Chinese authorities for approval to develop tight gas in the Jinqiu shale gas block..
Shell and PetroChina Co., the listed unit of CNPC, are already operating the Changbei tight gas field in the Ordos Basin in Shaanxi province of China and exploring the Fushun-Yongchuan block in Sichuan.
Related Reading: Shell Has High Hope for China Unconventional Gas