Major Discovery of Shale Gas in Sichuan Basin; Sinopec Announces First Breakthrough in Cambrian Qiongzhusi Formation

Sinopec Southwest Oil & Gas Company of China Petroleum (”Sinopec Southwest”) & Chemical Corporation (HKG: 0386, “Sinopec”) has discovered new shale gas reserves in the Jinshi 103HF exploratory well deployed in the Sichuan Basin. With a daily natural gas production reaching 258,600 cubic meters and an evaluated resource capacity of 387.8 billion cubic meters, it is a major breakthrough for China’s shale gas exploration, and the first discovery in the Cambrian Qiongzhusi Formation. The find has significantly expanded shale gas reserves and will further promote shale gas exploration and production in the Sichuan Basin.

The Sichuan Basin is composed of two main formations, the Longmaxi and Qiongzhusi. The former has seen significant exploration and production including China’s first deep shale gas field, Weirong, while Qiongzhusi boasts the most potential for future exploration. The breakthrough will provide a strong impetus for expanding shale gas exploration and development from the single formation to reach new formations and field types, and contribute to build a national natural gas (shale gas) reserve with 100 billion cubic meters of capacity in the Sichuan and Chongqing region.

Sinopec Southwest has shifted from the traditional method of seeking shale gas in organic rich black shale and established new evaluation standards for the Cambrian shale beds, which led to the discovery of the silty shale gas exploration target layer. Faced by the challenges of the thin shale layer, large longitudinal stress difference and difficulty in scaled transformation, the company has implemented a new fracturing process and fracturing fluid system to achieve multi-stage fracturing transformation.

In the past decade, Sinopec Southwest has advanced oil and gas exploration and development, with major achievements including the completion of the world’s first ultra-deep, high-sulfur reef gas field, the Yuanba gas field, and the identification of China’s first deep shale gas field, Weirong shale gas field. The company has implemented new reserves of the scale of over 100 billion cubic meters, including Hexingchang Xujiahe, Yongchuan Longmaxi and Jingyan Qiongzhusi formations. Its annual natural gas production has increased from 2.82 billion cubic meters in 2012 to 8.001 billion cubic meters in 2021, with a cumulative production of 52.95 billion cubic meters, which makes the subsidiary the largest natural gas producer in the Sinopec Group.