Shell, CNPC team up to produce natural gas in China

Mikaila Adams
OGFJ Associate Editor

For the second time in a week, China National Petroleum Corp. (CNPC) and Shell have joined forces in the name of unconventional gas. Most recently, state-owned CNPC and Shell have developed a plan to jointly develop and produce natural gas in China's Sichuan basin. 

China
The production sharing contract awaits Chinese central government approval. Under the 30-year contract, Shell and state-owned CNPC would appraise and potentially develop tight gas (basin-centered gas) reservoirs in an area of approximately 4,000-square-kilometer in the Jinqiu block of central Sichuan Province.

"This is another step forward for Shell's world-wide tight gas strategy, building on our technology and production track record in China and elsewhere," said Malcolm Brinded, executive director of Upstream International. 

Shell and PetroChina currently operate Changbei, another tight gas field in the Ordos Basin near Yulin in Shaanxi Province of China. Commercial production in Changbei began in March 2007, supplying 3bcm natural gas a year to Beijing and other cities in eastern China.

Australia
As is the current trend in the US (think Barnett, Marcellus, Haynesville), unconventional gas supplies are a hot topic around the globe. This deal marks the second for Shell and CNPC in a week. 

Days ago, Shell Energy holdings Australia Ltd. signed an agreement with PetroChina Co., a subsidiary of CNPC, jointly proposed a purchase of Australian coal-seam gas producer Arrow Energy Ltd. for A$3.5 billion. The joint venture, CS CSG (Australia) Pty Ltd., is subject to shareholder and regulatory approval.

Shell has onshore tight gas production in China, the US, and Canada, and appraisal activities in other regions.

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