China Oil Find Could Trigger Shale Drilling Surge
(Bloomberg) -- An oil discovery in a remote corner of northwestern China could trigger a surge in shale drilling, benefiting service companies and providing a needed output boost for the world’s biggest importer, according to analysts at Morgan Stanley.
PetroChina Co. has achieved daily output of 100 tons of oil (733 barrels) at a test well in the Jimsar field in Xinjiang province, suggesting that shale oil has strong commercial potential in the nation for the first time, analysts including Andy Meng said in a Feb. 18 note.
China has had some success in producing shale gas, but advancing on shale oil would be a particular help to the world’s largest crude importer, which has seen output decline since 2015 even as the country’s leadership extols the virtues of energy self-sufficiency. Still, it’s unlikely China will be able to scale the heights of U.S. shale, which accounts for about half of American production, Morgan Stanley said.
The bank estimates shale oil output in China could reach about 100,000 to 200,000 barrels a day by 2025 -- still a sliver of total output. By comparison, the U.S. produced 8.3 million barrels a day in February, according to Rystad Energy.
Nevertheless, excitement over shale could spur more spending and boost revenue for the oilfield service companies that will be called on to handle the higher workloads, Morgan Stanley said. Yantai Jereh Oilfield Services Group Co., which is up 31 percent this year, and SPT Energy Group Inc., which has risen 18 percent, are among the potential beneficiaries, it said.
“We believe the Jimsar shale oil discovery is likely to trigger China’s shale oil revolution,” Meng said in the report. “We expect a further capex rise in 2019, which could make onshore oilfield services names the key beneficiaries.”
While Jimsar is China’s first shale oil find, the country has been drilling shale gas for years. But difficult geology and restrictions that keep drilling in the hands of the state-owned giants have slowed development. While the U.S. Energy Information Administration estimates that China has nearly twice as much underground shale gas as the U.S., the U.S. produced about 639 billion cubic meters of the fuel in 2017, compared to about 9 billion in China.
To contact the reporters on this story: Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net ;Aibing Guo in Hong Kong at aguo10@bloomberg.net To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net Jason Rogers, Jasmine Ng
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- USA Driving Activity to Increase to All-Time Highs
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- I Squared Eyes Full Ownership of Europe Gas Storage Firm
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension