Should Opec worry? China joins US shale oil revolution with deep fracking breakthrough
Jimsar shale oil demonstration zone in Xinjiang has reached its annual crude output goal of 1.7 million tonnes 22 days ahead of schedule
That would see China join the United States, whose shale boom earlier this century enabled it to become the largest crude oil producer in the world. This fundamentally altered the international oil market, with significant impact on oil exporters, particularly members of the Organisation of the Petroleum Exporting Countries (Opec).
The boom weakened Opec’s market power with a steady supply of crude oil, as global resources of unconventional oil, such as those trapped in shale rock, far exceed conventional oil reserves.
China has its own vast shale potential – the largest recoverable shale gas and third largest recoverable shale oil reserves in the world, according to the US Energy Information Administration (EIA).
As the world’s largest crude oil importer, China’s commercial exploitation of its shale reserves could threaten Opec and its allies. However, accessing these formations, buried deeper than those found in the US, has presented a significant challenge.
On Tuesday, the Jimsar shale oil demonstration zone in Xinjiang – China’s first such national-level zone – reached its annual crude oil output goal of 1.7 million tonnes 22 days ahead of schedule.
Established in 2020, the shale oil demonstration zone in the Junggar Basin covers an area of 1,278 sq km (493 square miles) and could potentially yield more than 1 billion tonnes of crude oil, according to a report on Tuesday by ministry newspaper Science and Technology Daily.
Shale oil, also referred to as tight oil, is hydrocarbons found trapped within shale rock formations, fine-grained sedimentary rock made from compacted mud, that can be extracted for refining.
According to EIA estimates last updated in 2015, the US has around 78.2 billion barrels of recoverable shale oil resources, followed by Russia at 74.6 billion barrels and China with 32.3 billion.
The Jimsar project ... demonstrates [China’s] world-leading comprehensive strength in the unconventional oil and gas sector
Shale oil is mainly extracted by drilling down into formations and hydraulic fracturing, or fracking, which involves horizontally injecting high-pressure fluid to crack the rock and release the trapped fossil fuels.
The Jimsar shale oil reservoirs lie at depths exceeding 3,800 metres (12,460 feet) and have extremely low permeability – one ten-thousandth that of conventional oil – posing technical challenges to extraction, according to the report.
Du Xuebiao, a zone manager from the China National Petroleum Corporation’s Xinjiang oilfield, said they used several innovations to tackle this challenge, thereby increasing the production of a single well by more than 60 per cent throughout its life cycle.
“The Jimsar project not only provides a replicable and scalable technical and management paradigm for the development of similar resources in China, but also demonstrates my country’s world-leading comprehensive strength in the unconventional oil and gas sector,” Du told Science and Technology Daily.
The Jimsar demonstration zone is just one of several shale oil projects in China, including two other national-level demonstration zones in the country’s eastern province of Shandong and northernmost province of Heilongjiang.
In 2023, the US produced around 3.04 billion barrels of shale oil, equal to about 64 per cent of total crude oil production, according to the EIA.
In 2024, China’s shale oil production exceeded 6 million tonnes – equivalent to around 45 million barrels of oil. That is only a small portion of the 213 million tonnes – or more than 1.59 billion barrels – of crude it produced in 2024.
The Changqing oilfield in northwestern Gansu province is China’s largest shale oil production base, accounting for more than half of its output last year, according to state broadcaster CCTV.
It took the Changqing oilfield 12 years to reach a cumulative shale oil output of 10 million tonnes but only three years for it to double that to 20 million cumulative tonnes of shale oil in November.
China is the world’s largest importer of crude oil, mostly from Russia, Saudi Arabia, Iraq, Oman and Malaysia, according to EIA data.
In 2024, more than 27 per cent of crude oil exports from Opec went to China, according to the organisation, whose 12 members are Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates and Venezuela.
Despite the vast potential and global abundance of shale, only a handful of countries produce of shale oil and gas in commercial quantities due to its low technical recoverability.
This includes the US, Canada, Argentina and China, according to the EIA.
US shale oil reserves are mostly marine deposits, while Chinese reserves are mainly lake deposits, according to a paper published in 2023 by researchers from oil and gas company PetroChina and the China National Petroleum Corporation.
According to the paper published in the journal Petroleum Exploration and Development, China’s deposits are buried deep and harder to fracture.
“There is still a big gap between China and the United States in reservoir stimulation and production technology of shale oil and gas,” the researchers said.
“Therefore, it is necessary to deepen the understanding of basic laws, tackle the ‘bottleneck’ technology of oil and gas stimulation, carry out on-site fracturing and production tests, and develop the technologies supporting oil and gas development.”
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