Experts: Shale oil discovery in Shandong will boost output

The discovery of significant geological shale oil reserves at Shengli Oilfield will further boost oil output in the country while ensuring national energy security, experts said.

China Petroleum and Chemical Corp, also known as Sinopec and the world's largest refiner by volume, said on Wednesday that the company has discovered an initial 458 million tons of geological shale oil reserves at Shandong province's Shengli Oilfield, one of the country's largest conventional oil and gas fields.

Total shale oil resources amount to more than 4 billion tons, according to preliminary calculations.

The oilfield has vowed to realize production capacity for shale oil of up to 1 million tons during the 14th Five-Year-Plan period (2021-25).

Yang Yong, chief expert in development geology at Sinopec Shengli Oilfield, said there is no precedent for successful development of shale oil as thick as this in the world, and that a series of technological challenges need to be overcome. Shale oil is one of the unconventional oils produced from oil shale rock fragments.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, said the discovery will ensure increasing oil and gas output in the long term while contributing to national oil supply security.

"With tremendous shale oil and shale gas resources, China is the second country that has achieved breakthroughs in the sector after the United States," Luo said.

"With recent discoveries in Fuling and Changqing, the country is now on a fast path of developing its shale oil with several breakthroughs made in recent years, and it is believed the country's oil majors will focus more on in-depth and unconventional oil and gas exploration in the future."

China National Petroleum Corp has recently discovered a major shale oilfield in Daqing, Heilongjiang province, with predicted geological reserves of about 1.268 billion tons.

Sinopec said in October that the cumulative output of the Sinopec Fuling shale gas field, the first large-scale commercial field of its type in the country, has exceeded 40 billion cubic meters of gas, setting a record for cumulative production in the country.

The National Bureau of Statistics said China's domestic oil production has been gradually increasing from 189.11 million tons in 2018 to 191.01 million tons in 2019 and 194.92 million tons in 2020.