PetroChina and Shell will invest US$600mn to develop the Changbei natural gasfield in China. Shell will be entitled to about 50% of the gas volumes over the 20-year project lifetime.
“The Changbei project is the largest onshore Chinese-foreign exploration and production project. It will harness the best of our two companies in the project, combining Chinese design, materials and services with sophisticated technologies from Shell,” says Yan Cunzhang, president of PetroChina.
Shell and PetroChina expect the gasfield to start delivering 1.5mn cubic metres per year to energy-hungry Beijing, Shandong, Hebei and Tianjing. Production will reach 3bn cm/pa by 2008.
The project entails the construction of processing facilities, pipelines and the drilling of about 50 horizontal and multilateral wells over 10 years.
Liahoe Petroleum Exploration Bureau was awarded a contract to drill about 30 wells over the next six years, while Halliburton was awarded a four-year drilling contract. A three-year contract for drilling fluids and associated services was extended to the Engineering Technology Institute of Changqing Petroleum Exploration Bureau.
Moreover, a consortium comprising China Petroleum Engineering Company, Southwest Company and Sichuan Petroleum Engineering Construction Company signed a letter of intent for a gas processing facility.
“We are very pleased to take a final investment decision on this project bringing our experience in subsurface reservoir management and advanced drilling technology to this partnership with PetroChina. Changbei is a perfect fit with Shell’s strategy to grow its portfolio of integrated gas and to supply clean energy to meet China’s energy demand from both indigenous and external resources.” says Yves Merer, president of Shell China Exploration and Production Company.