Sinopec Says Puguang Gas Field the Largest Discovered in China

Puguang Gasfield
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China Petroleum & Chemical Corporation (Sinopec) announced the discovery of the Puguang Gas Field in the Northeast region of Sichuan Province, the largest and richest marine facies gas field ever discovered in China.

After examination by the Mineral Resources Reserves Assessment Office of the State Ministry of Land and Resources at the end of 2005, the aggregate proved recoverable reserves in the Puguang Gas Field are estimated at 251.075 billion cubic meters and the technical recoverable reserves at 188.304 billion cubic meters. The Puguang Gas Field is also one of the five gas fields with reserves of more than 200 billion cubic metres discovered in China.

According to the assessment results, the Puguang Gas Field is qualified for commercial development. Sinopec Corp. has submitted a proposal for Phase I development to the relevant department of the State. According to the proposal, production of commercial gas will exceed 4 billion cubic metres per annum by 2008 and reach 8 billion cubic metres per annum by 2010. An ancillary natural gas pipeline will be constructed from the Northeast region of Sichuan Province to Jinan in Shandong. The State has authorized Sinopec Corp. to commence preliminary stage work for the project.

Commenting on such a significant discovery, Chairman Chen Tonghai of Sinopec Corp. said: "The discovery of the Puguang Gas Field was made possible by innovations in marine facies exploration theory, exploration strategy, exploration technology and operations management and represents a significant breakthrough in China's marine facies exploration theory and practice and significantly expands Sinopec Corp.'s natural gas exploration areas. Sinopec Corp. formulated a strategic exploration plan by focusing on the Southern marine facies, thereby accelerating exploration in the Sichuan Basin and its adjacent areas to pursue greater development and breakthroughs."

According to experts at the Mineral Resources Reserve Evaluation Office in the Ministry of Land and Resources, the Puguang Gas Field is deeper than 5,000 meters. The discovery of the Puguang Gas Field represents a tremendous achievement in oil & gas exploration in deep marine facies carbonate stratum, significantly expanding the field for exploration of oil & gas in China. Further drilling is being carried out to enlarge the exploration area and potentially expand discovered reserves. On the fringes of the Puguang Gas Field, a series of gas bearing traps have been discovered, including Maoba, Shuangmiao, Laojun and Tongnanba. It is expected that, by 2008, when exploration in the Puguang Gas Field and its fringe enclosures is completed, discovered reserves will be higher than their current level.

Commercial discovery was made at the end of 2002. Following the discovery, Sinopec Corp. accelerated technological innovation and redoubled its exploration efforts. By combining in-depth basic research, innovation in exploration theory and in mountain seismic exploration technology and well casing technology with innovations in reserve forecasting in marine facies carbonate stratum, Sinopec Corp. developed an oil & gas evaluation methodology well adapted to the conditions of this area. Thanks to this new methodology, Sinopec Corp. gained deeper insight and decisively shifted exploration concepts from drilling tectonic gas reserves to drilling tectonic lithologic gas reserves. These new exploration theories and techniques lead to the cost-efficient discovery of the Puguang Gas Field, the only gas field, so far, with discovered reserves of over 200 billion cubic meters in the Sichuan Basin. The discovery is significant for the resource development strategy of Sinopec Corp. and paves the way for healthy growth in Sinopec Corp.'s gas business.

The breakthrough in marine facies exploration theory, as evidenced by the discovery of the Puguang Gas Field, further boosted Sinopec Corp.'s confidence in marine facies exploration. At present, Sinopec Corp. has 12 exploration zones in the Sichuan Basin and its adjacent areas with an exploration area of 100,000 square kilometres, laying a solid foundation for Sinopec Corp.'s long-term natural gas exploration objectives. Applying new theories, Sinopec Corp. has formulated a medium and long-term strategic plan for accelerating natural gas exploration and development in the Sichuan Basin and its adjacent areas. Production of natural gas, construction of a pipeline and sales and marketing will be launched simultaneously.

Sinopec Corp. will build on the lessons it learned and the expertise it acquired throughout this project to further develop and refine marine facies exploration theory and technology. This will pave the way for increased reserves and production, contribute to the sustainable, healthy and coordinated growth of the national economy and increase shareholder value.


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