1

Research Institute of Petroleum Exploration & Development, CNPC

March, 2016

Progress and Achievements of Shale Gas Development in CNPC

Ailin Jia

2

In recent 5 years, shale gas exploration and development inChina has make great progress, especially in reservoir evaluation,productivity estimation and stimulation technologies. Both provedreserves and production rate has been growing rapidly, makinglarger-scale development possible.

CNPC has actively promoted the commercial developmentfor shale gas. The breakthrough of Well (Wei201) in 2010initiated shale gas exploration and development in China. In early2012, we began pilot study in Changning-Weiyuan and Zhaotongplays. After years of field experiment and practice, CNPC hasinnovated technique series for the development of shale gasreservoirs buried less than 3,500m.

Introduction

3

Outlines

1. Current state of shale gas development

in CNPC

2. Shale gas development technologies

3. Suggestions

4

Shale of Longmaxi Formation

Burial depth map of Longmaxi Formation, Sichuan Basin

OGIP of Longmaxi Formation buried lessthan 4,000m is estimated to be over 7,500billion cubic meters. About 4,000 billioncubic meters buried less than 3,500m

Stratigraphy column of Sichuan Basin

(1) Longmaxi Formation with huge reserves is the main shale gas playin Sichuan Basin and surrounding regions.

5

Weiyuan

Fushun-Yongchuan

Changning

Zhaotong

Favorable blocks of Longmaxi shale gas, Southern Sichuan Basin

Developing blocks of Longmaxi shale gas, Southern Sichuan Basin

4 favorable blocks: Changning, Weiyuan, Fushun-Yongchuan, Zhaotong,

with areas of 10,000 km2 and OGIP of 4,500 billion cubic meters.

3 developing blocks: part of Changning, Weiyuan, Zhaotong, with areas of

2,400 km2 and OGIP of 1,200 billion cubic meters.

(2) CNPC: Current favorable blocks

Weiyuan

Changning

Zhaotong

W204W202

N201YS108

6

NO. BlockNO. of DrilledWells

NO. of Producing

Wells

DailyProduction

(104m3)

Annual Productivity

(108m3)

Productionin 2015(108m3)

1 Changning 50 28 310 9.2 5.90

2 Weiyuan 65 51 421 12.8 4.68

3 Zhaotong 27 19 132 5.0 1.66

total 142 98 863 27.0 12.24

By 2015: 142 drilled wells, 98 producing wells with daily production of

8.6 million cubic meters, annual production of 1.3 billion cubic meters.

The number of producing wells increases by 6 times and annual

production increases by 7 times.

(3) Shale gas productivity of CNPC

4 5 14

98

0.25 0.61.6

13

0

20

40

60

80

100

120

0

2

4

6

8

10

12

14

2012 2013 2014 2015

Annu

al p

rodu

ctio

n(×1

08m

3 ) NO. of Producing wells

Annual production

NO

. of p

rodu

cing

wel

ls

7

CNPC has set up a leading group to push forward shale gas exploration

and development

The productivity and annual production will increase more rapidly in the

next five years.

President of CNPC announces shale gas plan Establishment of Shale Gas Leading Group

Establishment of Chongqing Shale Gas Co. Ltd. Officer of Sichuan province listens to the introduction of shale gas plan

(4) Shale gas prospect of CNPC for the 13th Five-Year Plan period

8

Outlines

1. Current state of shale gas development

in CNPC

2. Shale gas development technologies

3. Suggestions

9

Breakthrough in shale gas development technologies

1

5 2

34

Shale gas development technologies

10

inline1950

Geological map of well block N209 Inline1950 seismic migration

3D stratigraphic surface Shale reservoir thickness Natural fracture prediction

1. Geological Evaluation

(1) Seismic survey

Well block N201

Well block N201

Well block N201

• 2D seismic survey for evaluation stage

• 3D seismic for production well site selection and trajectory design.

11

321m

Carbonaceousshale

102m

21m

UpperLongmaxi

MiddleLongmaxi

LowerLongmaxi

UpperUnit

MiddleUnit

LowerUnit

UpperZone

MiddleZone

LowerZone

Siliceousshale

Carbonaceousshale

The characteristics of favorable reservoirs: high content of Uranium, a big gap between HSGR andHCGR curves, low density.

• Three members: Longmaxi Formation divided into three members• Three units: lower Longmaxi Member further divided into three units• Three zones: lower unit with most favorable reservoirs divided into three zones

(2) Stratigraphy correlation

12

Stratigraphy correlation of Changning-Zhaotong-Weiyuan Area

• Favorable zones are stable in thickness throughout the region.

Weiyuan Changning Zhaotong

Upper unit: average thickness 36m

Middle unit: average thickness 45m

Lower unit: average thickness 20m

36.9km 164.4km 11.1km 18.7km

Low

er m

embe

r

13

Mudstone with siltstone belts

Siliceous shale

Upper unit

Interbedding of calcareous mudstone and shale

Lower unit

Middleunit

Carbonaceous shale Graptolite fossils

(3) Lithology facies

Pay zone lithology

14

UpperLongmaxi

Middle Longmaxi

Favorable reservoirs

11.7km 7.7km16.1km

Lower Longmaxi

21.3m 19.7m 20.6m21.8m 20.8m

(4) Sweet spot distribution

• Longmaxi shale is deposited in a marine shelf environment, which makes the

favorable reservoirs (sweet spots) distributed in a vast area

• Good seal condition leads to abnormal high pressure and high production rate

Stratigraphy correlation of Changning-Zhaotong areaLongmaxi Formation sedimentary model

15

Sweet spots prediction based on 3D seismic interpretation

Criterion for geological sweet spots

(5) Key factors for sweet spots

• Geological factors： TOC, gas content, porosity, thickness and

pressure

Factors Criterion

TOC(%) >2

Thickness (m) >25

Gas content (m3/t) >2

Pressure coefficient >1.2

Porosity (%) >5

geological sweet spots

16

Factors Zhaotong Changning Weiyuan

Structuralbackground

Axis and south wing of syncline

Gentle syncline

Slope of palaeohigh

Stress state Strike slip-compression

Twist compression

Twist compression

Vertical depth/m 2530 2650 3897

Thickness/m 31～35 30～46 24～40

TOC/% 2.1～6.7 2.8～5.3 2.2～3.3

Porosity/% 2.4～5.6 2.9～5.0 2.4～4.87

Gas content/m3/t 2.0～5.2 1.7～3.5 2.5～4.35

Stress coefficient 1.8 2.03 1.96

Clay content/％ 27.5 25.2 31～45

Horizontal stress difference/MPa 20～30 10～13 15～9

Young modulus/MPa 35000 33940 19930

Poisson ratio 0.18 0.21 0.18

Britlleness 47～65 55～65 46～69

Natural fracture Highly fractured

Highly fractured

Highly fractured

Well planning based on geological and engineering sweet spots

• Engineering factors such as brittleness, Young modulus and Poisson ratiocontrol the fracturing efficiency

17

• Optimization for casing program, PDC bits, gas factory drilling et. al.

• Drilling cycle shortened from 139 days to 69 days

• Water-based drilling fluid being tested, much cheaper and more

environment-friendly

Drilling cycle of different period Drilling cycle using different drilling fluid

2. Fast Drilling of Horizontal Wells

150

70

196

67.5 55.583.5

0

50

100

150

200

250

Well block N201

Aver

age

drilli

ngcy

cle/

day

Evaluation Period Productivity Construction Period

Well block W202 Well block W2040

5

10

15

20

Oil-based Water-based

18.7

12.3

Hor

izon

tal s

ectio

n dr

illing

cyc

le/d

ay

18

Proppant density,1.0g/cm3

H6-3 H6-5 H6-7

Zipper-style fracturing

zipper-style fracturing: forming network of fractures

3. Multiple fracturing treatment

• Successful techniques including low-viscosity slick water, low-density proppant,

soluble bridge plug and zipper-style fracturing

• 8-10 wells in one platform, fracturing operation cycle of one platform shortened

to about 60 days

• Average well production increases 60%, from 100,000 m3/d to 160,000 m3/d

High displacement: from couples of cubic meters to dozens of cubic meters

Low-density proppant: reducing pollution

Soluble bridge plug: no need for grinding, increasing wellbore diameter

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(1) Gas well classification

Correlation between EUR and screened five components

Types ψAverage rate in 1st

year（10,000m3/d）

EUR（10,000m3）

I ≧1.87 ≧7.5 ≧9,880

II 1.36~1.87 5.5~7.5 7,220~9,880

III ≦1.36 ≦5.5 ≦7,220

Criteria of “five components synthetic classification method”

Five components synthetic classification method (FCSCM)• Screening out 5 geological & engineering factors having influence production

performance;

4. Productivity evaluation

/ / / /ln

/avg avg avg avg

avg

h h C C S Sβ βψ

η η⋅ ⋅ ⋅

=

In fluence factor o n rate & E U R

O G IP

E n g ineering factors

R eservoir ch aracteristics

Permeability

Pressure coefficient (S)

Well spacing

Net pay thickness (h)Gas content (C)

Discharge (η)

Proppantvolume (β)

Horizontal range

Correlated with

PorosityFluid volumeconcentration

20

(2) Production performance evaluation

Flow mechanism of shale gas reservoirs

At equilibrium, gas molecules are distributed throughout porous media Free gas: existing as compressed gas in the pores, proportion by 60~70% Adsorbed gas: covering the surface of the kerogen material

Gas flowing process is divided into three sequences: Gas desorption from matrix bulk to microscale fractures Gas flowing from microscale to macroscale fractures Gas flowing from macroscale fractures to main hydraulic fractures and well hole

Macro fractures of formations

Production performance model of horizontal well

21

Average OGIP per well is about 100 million cubic meters Average EUR amounts to 75 million cubic meters for each well. Average production rate in 1st year reaches 64,000m3/d

EUR evaluation for gas wells which has been producing over 1 year.

0

2000

4000

6000

8000

10000

12000

14000

长宁

H3-

4长宁

H3-

5长宁

H2-

5长宁

H3-

2YS

108H

1-3

长宁

H2-

7宁

201-

H1

YS10

8H1-

5长宁

H2-

2长宁

H2-

6长宁

H3-

6威

204H

1-2

长宁

H2-

4长宁

H3-

1威

204H

1-3

威20

4平长宁

H3-

3长宁

H2-

1长宁

H2-

3威

205平

平均

7580

预测

单井最终累积产量（万方）

EUR

(10,

000m

3 )

0

2

4

6

8

10

12

长宁

H3-

4长

宁H

3-5

长宁

H2-

5YS

108H

1-3

长宁

H2-

7宁

201-

H1

长宁

H3-

2YS

108H

1-5

长宁

H2-

2长

宁H

2-6

长宁

H3 -

6威

…长

宁H

2-4

长宁

H3 -

1威

…威

204平

长宁

H3-

3长

宁H

2-1

长宁

H2-

3威

205平

平均

6.4

第一

年平均产量（万方）

Aver

age

prod

uctio

n ra

te in

1s

t yea

r (10

,000

m3 /d

)

Average production rate in 1st year for gas wells which has been producing over 1 year.

Results of production performance analysis:

*20 wells with over 1 year historyare analyzed

22Drilling target in low member of Longmaxi Fm.

Geology reason:middle zone• higher brittleness, indicating

easy to be fractured• located in the middle of high

quality layer• higher EUR prospectedlower zone• highest reserve abundance• higher initial production rate

5. Optimization of development parameters

(1) Drilling target

102m 21m

Upper unit

Lower unit

Previous target

Currenttarget

Middle unit

Upper zone

Middle zone

lower zone

Best drilling target : the low member of Longmaxi Fm. the lowermember possesses the best reservoir characteristics

23

Horizontal length: 1500-1600m Fracture stages: 16-19 Cluster spacing: 20-30m Alternative fracturing treatment between adjacent wells.

(b) Pressure distribution at later stage of producing with optimized fracture parameters

Through optimization

(2) Horizontal length and fracture parameters

(a) Pressure distribution at later stage of producing with current fracture parameters

Two scenarios of multiple fractured horizontal well placement Comparison of cumulative gas production under two scenarios

24

Well spacing can be reduced from 400-500m to 300-400m Well density increases by 30% Recovery factor enhances from 25% to 35%.

Barnett Haynesville Marcellus Eagle Ford CNPC

Horizontal length（m) 1219 1402 1128 1494 1429

Well spacing (km2） 0.24~0.65 0.16~2.27 0.16~0.65 0.32~2.59 0.36~1.1

Average well spacing（km2) 0.45 0.5 0.42 0.6 0.64

Fracture half-length（m）

91~122 91 91~122 107 90~120

Average well distance（m）

280 260 260 300 400~500

Well spacing of shale gas field in China and U.S.A

(3) Well spacing

25

Experimental data on stress sensitivity of tight sands

Core analysis in lab reservoir scale

Tight gas reservoir

Shale gas reservoir

Tight gas sand reservoir

Shale gas reservoir

Thin bedded shale layer

fracture

Formation deformation

Pressure drop

0

0.2

0.4

0.6

0.8

1

0 10 20 30 40 50

K/K 0

有效应力（MPa）

基质

人工支撑裂缝

0

0.2

0.4

0.6

0.8

1

0 10 20 30 40 50

K/K 0

有效压力（MPa）

基质（含微裂缝）

人工支撑裂缝

Non-permeable layer

Lenticular sands

fracture

Pressure drop

(4) Production operation optimization

Experimental data on stress sensitivity of shale

MatrixFracture filled with proppant

MatrixFracture filled with proppant

Stress (MPa)

Stress (MPa)

At core scale, shale and tight sand stone samples are both sensitive to stress. At reservoir scale, formation structure is the main controlling factor.

• Supporting from surrounding wall rock results in poor stress sensitivity of pay zone.• Lack of supporting, thin-bedded shale reservoir shows obvious stress sensitivity.

26

0

10

20

30

40

0

4

8

12

16

20

2/13/2015 3/25/2015 5/4/2015 6/13/2015 7/23/2015 9/1/2015 10/11/2015 11/20/2015

Cas

ing

pres

sure

(MPa

）

Prod

uctio

n ra

te（

10 th

ousa

nd

m3/

day）

日产气 套压

To avoid steep decline of production rate at early stage

EUR of single well has potential to increase by 30%

Well name Vertical depth（m） Target formation Horizontal length（m） Stages EUR（106m3）

Well 1 2430 Middle zone, S1l3 1045 10 103

Well 2 2605 Middle zone, S1l3 1350 14 81

0

8

16

24

32

40

0

4

8

12

16

20

7/18/2012 2/3/2013 8/22/2013 3/10/2014 9/26/2014 4/14/2015 10/31/2015

Tubi

ng p

ress

ure

（M

Pa）

Prod

uctio

n ra

te（

10 th

ousa

nd

m3/

day）

日产气 油压 Well 1

4.5 million m3/MPa

Well 2

1.3 million m3/MPa

1.2 million m3/MPa

Daily production rates

Daily production rates Tubing pressure

Casing pressure

27

Outlines

1. Current state of shale gas development

in CNPC

2. Shale gas development technologies

3. Suggestions

28

Suggestions

Geology conditions varying in different regions such as depth, gas

content, pressure coefficient, faults etc., it is necessary to improve

understanding and find out more potential targets.

Weiyuan

Fushun-Yongchuan

Changning

Zhaotong

Favorable blocks of Longmaxi shale gas, Southern Sichuan Basin

29

Suggestions

Drilling, completion & fracturing techniques need to be further

studied as for the formation buried more than 3500m.

Burial depth of Longmaxi Formation in Weiyuan Block

>3500m

30

Suggestions

The relation between production performance and operation

condition needs to be analyzed, due to limited production data.

Comparison between open pressure and limited pressure condition in the case of stress sensitivity

Probabilistic production forecast

2015/6/7 2016/6/7 2017/6/7 2018/6/7 2019/6/7 2020/6/7 2021/6/70

2

4

6

8

10

12

产气

量

(10

4 m3 /d

)

生产日期 (day)

日产气实测值 P10 预测 P50 预测 P90 预测

EURP10=8234 万方

EURP50=9745 万方

EURP90=10084 万方

Prod

uctio

n ra

te (1

04 m3 /d

)

Time (day)

Probabilistic forecast 1Probabilistic forecast 2Probabilistic forecast 3

0

2000

4000

6000

8000

10000

0

5

10

15

20

0 3000 6000 9000 12000生产时间 天

放压日产

控压日产

放压累产

控压累产

More cumulative production in thecondition of limited pressure by 30%

Open pressure

Limited pressure

Open pressure

Limited pressure

Cum

ulative production (104m

3)

Time (day)

Prod

uctio

n ra

te (1

04m

3 /d)

Limited production data leads toprobabilistic forecase

31

Suggestions

Designed horizontal well & fracturing parameters need to be further

evaluated, including target location, well spacing, effective fracture

length, height etc.

nf=7 nf=5 nf=3

系列1 系列2 系列3Iy<Iyopt Iy=Iyopt Iy>Iyopt

1 2 3 4 5 6 7i

nf=7 nf=5 nf=3

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0Iy

0

4

8

12

16

20

PI

2.9

2.8

2.7

2.6

2.5

2.4

2.3

2.2

PIi

nf=7 nf=5 nf=3

系列1 系列2 系列3Iy<Iyopt Iy=Iyopt Iy>Iyopt

1 2 3 4 5 6 7i

nf=7 nf=5 nf=3

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0Iy

0

4

8

12

16

20

PI

2.9

2.8

2.7

2.6

2.5

2.4

2.3

2.2

PIi

Drilling pad OGIPReserves（SRV）

Well spacing optimization Fracture parameters optimization

32

Thanks for your attention!