Houston-based oil and gas giant ConocoPhillips (NYSE: COP) has teamed up with China’s largest oil and gas producer, PetroChina Company Ltd. (PetroChina), on agreements targeting the unconventional resource space in Western Australia and in China’s Sichuan Basin.
“ConocoPhillips is pleased that PetroChina has recognized the significant resource potential and value of the Australian opportunities. Likewise, ConocoPhillips recognizes the Sichuan Basin as having some of the most prospective marine shales in China and looks forward to working with one of the world’s leading energy companies,” said Don Wallette, executive vice president, Commercial, Business Development and Corporate Planning, ConocoPhillips.
From ConocoPhillips, PetroChina will acquire a 20% working interest in the Poseidon offshore discovery in the Browse Basin, and a 29% working interest in the Goldwyer Shale in the onshore Canning Basin.
The Goldwyer Shale runs along the northern edge of Great Sandy Desert and stretches across 45,000 sq km of the onshore basin. It has generated particular interest since ConocoPhillips earned a 75% interest from New Standard Energy in July 2011 in exchange for $A113.5 million in drilling, coring and evaluation costs.
According to an April 2011 report by the US Energy Information Administration, the Goldwyer Shale contained 764 trillion cubic feet (tcf) of risked gas in place and 229 tcf of risked recoverable gas, the largest estimate for any basin in Australia.
ConocoPhillips also has agreed to enter into a Joint Study Agreement to identify unconventional resource reserves in the Neijiang-Dazu Block in China’s Sichuan Basin.
Under the JSA, ConocoPhillips and PetroChina will study the potential for unconventional resource development in the approximately 500,000 acre Neijiang-Dazu Shale Block in the Sichuan Basin.
While China's geology is unlike North America's, some in the industry are cautiously optimistic that the gas trapped in difficult terrain in inland provinces like Shanxi and Sichuan is recoverable. The deep reservoirs carry with them low permeability and porosity, but the US has made great strides in the development of such reservoirs at home and the hope is that the technology will be effective in China, as well.
If technically and commercially viable, the companies will advance development under a production sharing contract, which would be agreed upon during the study period.
All three agreements still require government and partner approvals.