Shale gas exploitation: Status, problems and prospect

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ScienceDirect Natural Gas Industry B 5 (2018) 60e74 www.elsevier.com/locate/ngib

Research Article

Shale gas exploitation: Status, problems and prospect Wang Shiqian Research Institute of Petroleum Exploration and Development, PetroChina Southwest Oil & Gas Field Company, Chengdu 610051, China Received 8 May 2017; accepted 25 June 2017

Abstract Over the past five years, great progress has been made in shale gas exploitation, which has become the most driving force for global gas output growth. Hydrocarbon extraction from shale helps drive the USA on the road to energy independence. Besides, shale oil & gas production has been kept in a sustained growth by continuous improvement in drilling efficiency and well productivity in the case of tumbling oil prices and rig counts. Shale gas reserves and production have been in a rapid growth in China owing to the Lower Paleozoic Wufeng and Longmaxi shale gas exploitation in the Sichuan Basin, which has become an important sector for the future increment of gas reserves and output in China. However, substantial progress has been made neither in non-marine shale gas exploitation as previously expected nor in the broad complicated tectonic areas in South China for which a considerable investment was made. Analysis of the basic situation and issues in domestic shale gas development shows that shale gas exploitation prospects are constrained by many problems in terms of resources endowment, horizontal well fracturing technology, etc. especially in non-marine shale deposits and complicated tectonic areas in South China where hot shales are widely distributed but geological structures are found severely deformed and over matured. Discussion on the prospects shows that the sustained and steady growth in shale gas reserves and production capacity in the coming years lies in the discovery and supersession of new shale plays in addition to Wufeng and Longmaxi shale plays, and that a technological breakthrough in ultra-high-pressure and ultra-deep (over 3500 m buried in the Sichuan Basin) marine shale gas exploitation is the key and hope. © 2017 Sichuan Petroleum Administration. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Keywords: Shale gas; Exploitation; Marine facies; Hot shale; Resource endowment; Sichuan Basin; South China; Complicated tectonic area; Gas play

1. Introduction During the “12th Five-Year Plan” period, China learned successful experiences in “shale gas revolution” of North America and made great progress in the shale gas exploitation through sustained endeavor and field tests on the technologies to recover the Lower Paleozoic marine shale gas in the Sichuan Basin. Along with the successive discovery and confirmation of the Upper Oligocene WufengeLower Silurian Longmaxi shale gas in the blocks such as Fuling, Weiyuan, Changning, and FushuneYongchuan in the Sichuan Basin, China's shale gas reserves and production have grown vigorously from zero. Up to the end of “12th Five-Year Plan”

E-mail address: [email protected]. Peer review under responsibility of Sichuan Petroleum Administration.

period, the cumulative proved marine shale gas reserves in China amounted to 5441
108 m3, and the production of marine shale gas in 2015 was 45
108 m3 [1]. Shale gas has gradually become an important sector for the future increment of gas reserves and output in China, and made China one of the only four countries that have realized commercial development of shale gas around the world (Fig. 1) [1e4]. However, continental and marineecontinental transitional shale gas, which was believed to have a great potential in the shale gas investigation in the early “12th Five-Year Plan” period, was not satisfactorily explored and was deemed to be limited in potential. The continental and marineecontinental transitional shale gas resources predicted in 2015 were much less than that in the early “12th Five-Year Plan” period, suggesting an uncertain prospect [5,6]. During the “12th Five-Year Plan” period, marine shale gas exploitation in the Sichuan Basin gained a significant

https://doi.org/10.1016/j.ngib.2017.12.004 2352-8540/© 2017 Sichuan Petroleum Administration. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

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Fig. 1. Shale gas production of four shale gas producing countries in 2015. Note: The data are sourced from Refs. [1e4], and the data of USA refer to dry gas production.

breakthrough and the commercial productivity was realized soon after commissioning. Accordingly, the future shale gas exploitation in the periphery of the Sichuan Basin and even in the whole South China is highly expected. On one hand, the National Energy Administration (NEA) adjusts shale gas production in China at the end of “13th Five-Year Plan” period from (300e600)
108 m3 to 300
108 m3, while some scholars propose that a target of 200
108 m3 by 2020 is more rational [5,7]. On the other hand, an optimistic opinion considers a production of 300
108 m3 a little conservative and suggests defining the 45
104 km2 range covering Sichuan, Chongqing, Yunnan, Guizhou, Hunan and Hubei, including the Sichuan Basin, as a “Special Shale Gas Zone”. If so, China's shale gas production by 2020 is expected to reach 1000
108 m3 [8]. Anyway, all of these viewpoints are based on an optimistic prediction on shale gas in the whole South China, although exploration practices and research achievements in shale gas licenses during the “12th Five-Year Plan” period have revealed that shale gas exploitation in many complex structural areas in the South China, other than the Sichuan Basin, is susceptible to huge geologic risks and engineering challenges, and the economy of commercial shale gas development is also uncertain [5,6,9,10]. However, it seems that some departments are too optimistic about marine shale gas exploitation in South China, especially in complex structural areas, when they make shale gas development planning, being less aware of the problems therein. Under this background, for the sake of orderly development of shale gas in the future, it is necessary to comprehensively review the current status of shale gas exploitation in China and abroad and identify the problems therein. 2. Basic situation and characteristics of shale gas development abroad 2.1. Shale gas exploitation has become the main driving force of global natural gas production growth According to the EIA evaluation in 2013, globally, shale gas was extremely rich, and technically recoverable shale gas resources were up to 206.56
1012 m3 [11]. Thus abundant shale gas resources laid a solid material foundation for the “shale gas

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revolution” in the North America. Although only four countries have realized the commercial shale gas exploitation (Fig. 1), it is believed that more and more countries will join the sector along with the technical progress and the constant improvement of policies, markets and infrastructures. EIA's prediction in 2016 [2] showed that the global daily natural gas production would increase from 97
108 m3 in 2015 to nearly 157
108 m3 in 2040, among which shale gas would make the greatest contribution e being tripled from 2015 to 2040, when shale gas production would account for 30% of global natural gas production, and China would rank as the second largest shale gas producer only after the USA. Besides the four countries producing shale gas, Algeria and Mexico will cooperate with IOCs to produce shale gas commercially around 2020 and 2030 respectively. By 2040, these six countries will totally contribute 70% to global shale gas production. Clearly, future natural gas production growth mainly relies on shale gas, and global shale gas production growth mainly depends on China and the USA. In China, key shale gas production and breakthrough are expected in the marine shale areas in the southern part of the country [1]. 2.2. Shale oil/gas exploitation has led the USA towards energy independence In the USA, since the discovery of Barnett shale gas play in the early 1980s, 13 shale oil/gas plays have been put into commercial development [12], and shale gas development has grown swiftly especially from the beginning of the 21st century. The substantial growth of natural gas production in the country is mainly contributed by shale oil/gas. The annual production of shale gas (only dry gas) increased quickly from nearly 100
108 m3 in 2000 to nearly 4000
108 m3 in 2015, accounting for 50% of the total annual natural gas production in the USA [13]. The Annual Energy Outlook 2016 of EIA [3] shows that the imported natural gas of USA was 283
108 m3 in 2015, and the supply and demand were basically in balance, with a difference of only 3%; it is anticipated that in 2018 the USA will become a net exporter of natural gas for the first time since the 1950s, and in 2040 the gap between the oil production and consumption in the USA is only 7%, and the daily import only is 1.5 million barrels. Therefore, the USA is now realizing energy independence by virtue of scale exploitation of shale oil/gas. In the past years, under the circumstance of tumbling oil prices, some new characteristics are observed in shale gas exploitation in the USA. 1) Shale gas production in the USA can still increase stably year by year under the circumstance of tumbling oil price, and will keep the trend of stable growth in the following years (2016e2040) [3]. This is benefited from the unique and unduplicated resource and market conditions in the USA as well as the constant progress of the low-cost high-efficient shale oil/gas development technologies [13], rather than the so-called industrial policy guidance, support or stimulation highlighted by the domestic opinions.

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2) Since the beginning of the 21st century, especially in the low oil price period, the rapid and sustained development of shale gas in the USA firstly benefited from the rich and highly endowed shale gas resources. Due to the development technology and practices in the Barnett shale gas play which was first developed, “shale gas revolution” spreads quickly throughout the USA, resulting in more and more shale gas discoveries in the petroliferous basins. In 2014, the technically recoverable shale gas resources exceeded 17
1012 m3, and the proved reserves reached 5.65
1012 m3 [6]. According to the EIA data announced in 2016, there are seven shale gas plays (namely the first seven gas plays from left to right in Fig. 2) with an annual production exceeding 200
108 m3 in the USA, among which four large shale gas plays (i.e. Marcellus, Eagle Ford, Haynesville and Barnett) delivered an annual production more than 300
108 m3, accounting for 70% of the total shale gas production in the USA. In addition, owing to the sharing of shale gas exploitation experiences among oil companies and the duplication of advanced technologies, the period that shale gas play can be put into scale production is greatly shortened. The horizontal drilling and completion technology and gas reservoir management experience developed in the Barnett shale gas play are copied in other plays successfully with better results. The data statistics show that the Fayetteville shale gas play in the Arkoma Basin commissioning in 2007 reaches a daily production of 2700
104 m3 that takes 22 years in the Barnett shale gas play. The Haynesville and Marcellus shale gas plays developed after Barnett have exceeded the highest annual production of 500
108 m3 of Barnett in 2011 and 2012 respectively, and replaced the overlord of Barnett that yields the highest production in the first decade of the 21st century. 3) Hughes analyzed 65000 shale gas production wells and found that the shale gas production decline rate ranged from 23% to 49% on average in the first year of

production in seven shale gas plays including Barnett, and from 80% to 90% in the first three years [16]. Therefore, in order to keep shale gas production stability, it is required to drill new wells to make up the rapid production decline of old wells. However, when the oil price goes down, oil companies will inevitably lessen the rigs to reduce the shale oil/gas development cost. According to the data published by Baker Hughes, the number of rigs in the USA decreased from 1859 in November 2014 to 951 in April 2015, while shale oil/gas production didn't descend but ascended [17]. Under the situation of falling oil price and reducing rigs, oil companies took some effective measures to realize stable production growth and low cost of commercial development. First, they focused the development on the high-quality resources in the “core plays”. Through integrated geological-engineering evaluation on shale gas, they selected the “core plays” with higher production and better profit for exploitation. They deployed the limited rigs in the “core plays”, so as to avoid a great decline of shale oil/gas production because of less drilling workload. Second, they reduced expenditure and improved operation efficiency. Some oil companies reduced the quantity of staff and rigs, and allocated the remaining staff and rigs to high-quality projects, so drilling time-efficiency was greatly enhanced. According to the statistics [17], the drilling time in the Eagle Ford and Permian Basin shale gas plays was shortened by 5e10% and 20% respectively. The rigs in the Heynesville shale gas play in 2015 was less than the oddments in 2011, and the production declined by 40%, but the shale gas production efficiency in 2015 was higher than that in 2011. What's more, the drilling timeefficiency in the major shale gas plays, such as Bakken, Marcellus and Eagle Ford, improved greatly in recent years, with the exploitation cost declining year by year [18]. In the Marcellus shale gas play, the rig number dropped from 144 in 2012 to 98 in 2015, but the

Fig. 2. Annual production of major shale gas plays in the world. Note: The data abroad are sourced from Refs. [14,15], and the domestic data from Ref. [1]. Except for the Monteney and Muskwa shale gas plays in Canada of which the production data are shale gas production from 2011 to 2012, those of other plays are the data in 2015.

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production was more than doubled. Third, they effectively reduced the production cost by technical innovation. Under the situation of tumbling oil price, many oil companies devoted to realizing higher production with less wells by virtue of new technologies and new methods. The enhancement of shale oil/gas production per well brought the improvement of economic profit. In terms of drilling operation, a platform well-plant mode was adopted with the support of intelligent rigs with a dual fuel translation system, which greatly shortened the drilling period and reduced the drilling cost. In terms of stimulation treatment, the technologies of horizontal well “zipper” fracturing and re-fracturing were usually adopted; with optimized well track and completion techniques, single-well EUR increased distinctively. Production practices demonstrate that these measures are effective in the low oil price era and can reduce the break-even price year by year for a majority of shale oil/ gas plays in the USA [18]. For example, the single well cost in the Heynesville shale gas play ranks the highest (almost USD10 million [12]) in the large shale gas plays in the USA, but the operation cost reduced by about 25% through technical innovation. The statistics show that the gas price at the break-even point in the Heynesville shale gas play generally declined by USD0.3e0.4/1000 ft3 (1 ft3 ¼ 0.0283168 m3, the same below) from 2014 to 2015, or even by USD0.5/1000 ft3 in some plays. 4) According to the 2016 outlook of EIA [3], the rising tendency of shale gas production in the USA will continue to 2040. Shale gas production growth in the USA at present and in the future is mainly contributed by two shale gas zones in the eastern Appalachian Basin, i.e. Marcellus and Utica, which produced shale gas of about 1650
108 m3 in 2015, accounting for 43% of the total shale gas production in the USA, and will exceed 50% in 2040, when daily production reaches 11.32
108 m3. 5) When it comes to the future of shale gas, some independent agencies in the USA hold the opinions quite different from the prediction of EIA. A research team consisting of 12 geologists, reservoir engineers and economists from the University of Texas at Austin conducted a systematic research on four shale gas plays (Marcellus, Heynesville, Fayetteville and Barnett) for three years. The team adopted a production prediction method with a precision at least twenty times that of EIA prediction, and concluded that the gross shale gas production of these four plays will reach a peak in 2020 and then decline rapidly, and only half of the EIA predicted production in 2030 [19]. This is apparently pessimistic in comparison with the predictions of EIA and Goldman Sachs etc. The Post-Carbon Institute also analyzed the production decline in five shale gas plays including Marcellus and concluded that the prediction of EIA is over optimistic [16] and that the prediction of the Institute on shale gas production in the USA from 2014 to 2040 is 46% lower than that of EIA.

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2.3. Although there are shale gas resource discoveries in some host countries, commercialization is still a long way to go In the early 21st century, the commercial triumph of shale gas exploitation in the North America rapidly spread to other countries with rich shale gas resources, such as Poland with special geo-politic meaning in Europe, Mexico and Argentina in Americas, South Africa in Africa, China and India in Asia, and Australia etc. [11] except a few countries like China and Argentina where commercial development of shale gas has been initiated, other countries are just slow and even stagnant in the development of shale gas, although they have obtained discoveries in shale gas exploration [20]. According to shale gas drilling and evaluation, the predicted shale gas resources are very rich in some countries, but their shale gas resource endowment is far less than USA. In addition to complex geological conditions, these countries lack shale gas exploitation technologies and experiences, welltrained and qualified professionals, drilling/fracturing facilities and surface facilities. Furthermore, there are no competitive service markets. As a result, shale gas development effect is not up to the expectations and the drilling cost is too high. In such countries as Mexico and Australia, the commercial development of shale gas has not been initiated even after shale gas discoveries are made. Because the anxiety about the wastewater treatment and environmental impact as well as earthquake induced by fracturing cannot be eliminated, some European countries, such as France and Sweden, don't support shale gas development or limit the application of shale gas fracturing with laws and regulations. As is known, the predication of shale gas resources or production is controlled by prediction methods, precision and assumptions etc. As mentioned above, the global shale gas resources published by EIA from 2011 to 2013 are doubted to some extent [9,16,19]. Some countries that were deemed with rich shale gas resources in the evaluation of EIA sharply lowered their expectations of shale gas exploration after preliminary drilling and evaluation. Poland is one of the most active countries developing shale gas in the world, and it launched five shale gas projects including the Baltic Basin early in 2010, attracting the participation of many IOCs. After the IOCs, such as Chevron and Exxon Mobile, drilled many exploratory wells, the testing productivity was low and could not reach the industrial standard, hence shale gas development in Poland was suspended. Considering the shale gas development effect lower than the expectation and the lower limit of TOC > 2%, EIA reduced the technically recoverable shale gas resources in the Lubin Basin of Poland from 1.25
1012 m3 in 2011 to 0.25
1012 m3 in 2013 [11] (Fig. 3). Shale gas resources in Poland predicted by Polish Geological Institute were not up to 1/10 of EIA's prediction in 2011 [19]. According to the prediction of EIA in 2011, the technically recoverable resources of Alum shale gas in Norway were 2.35
1012 m3. Shell drilled three exploration wells in the Alum shale with better geologic conditions in Sweden, but failed to get any gas. It is thus inferred that the commercial

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Fig. 3. Shale gas resource evaluation by EIA from 2011 to 2013. Note: Data in the histogram are sourced from Ref. [11].

success upon the complicated Alum shale gas in Norway is not as good as the previous prediction, and in the global shale gas resource evaluation report published by EIA in 2013, the technically recoverable shale gas resources in Norway were cut down to none (Fig. 3). Therefore, the results of shale gas resource evaluation conducted in the play evaluation and selection period will be ultimately verified by drilling and dynamically adjusted or revised with the E&D progress to suit the E&D practice. Overestimate on shale gas resources will possibly bring about an over-high expectation on the shale gas future. Thus the exploration commitment and investment as well as the E&D index will be increased, resulting in a giant waste of human resources and materials. The evaluation result of shale gas resources in Poland by EIA is a typical example, and there is the same problem in China (to be elaborated later). 3. Basic situation and problems of domestic shale gas development 3.1. Remarkable shale gas progress in the “12th fiveyear plan” period and a long-way-to-go future development Shale gas exploitation in China started from the Lower Paleozoic marine shale in the Sichuan Basin in 2009, and rapidly spread to marine, continental and marineecontinental resources in South China and even the whole country in the “12th Five-Year Plan” period. Especially, under the guidance of many shale gas policies issued by the government, an upsurge of shale gas exploitation emerged with the guidance of governments at all levels, participation of multiple investors, and engagement of non-oil enterprises like power and coal enterprises, thereby a rapid development of shale gas industry in China has been promoted. In the 44 shale gas exploration license blocks (including 21 bidding blocks) covering an area of 14.4
104 km2, triggered by the exploration evaluation in

the “12th Five-Year Plan” period, breakthroughs have been made in terms of marine shale geologic evaluation method, drilling/completion and fracturing technology, and shale gas reserves and production management [1]. Some departments and scholars have summarized the major achievements in China [1,5,6,21], which will not be repeated herein. The authors proposed the following remarkable characteristics from different aspects. 3.1.1. Multiple policies, quick implementation and great investment Since shale gas was listed as an independent mineral category at the end of 2011, relevant authorities have issued some policies successively, such as Shale Gas Development Program, Shale Gas Development and Utilization Subsidy Policy, and Shale Gas Industry Policy, in order to encourage and speed up domestic shale gas development. Some local governments owning shale gas resources also have issued documents related to shale gas exploitation and industry development in the “12th Five-Year Plan” period and the “13th Five-Year Plan” period, where shale gas is regarded as an important industry to promote the local economic development and boost GDP growth, and they set up shale gas development companies. In addition to CNPC, Sinopec, CNOOC, and Yanchang Oil, more than 10 investors including some private enterprises are attracted in shale gas exploitation through two rounds of shale gas license bidding. Compared with other countries and conventional oil/ gas or coalbed methane (CBM), the Chinese government provides a really grand support to the shale gas industry. The main possible factors controlling shale gas development in the future are not related to policy or mechanism. Up to the end of 2015, the national cumulative investment was RMB36.5 billion, including RMB1 billion from central and local finances as well as RMB2 billion from the bidwinning enterprises, and the remaining is all from oil companies. However, in terms of the inputeoutput, all investments were not recovered with shale gas production, expect for the

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oil companies' RMB33 billion which corresponded to a cumulative shale gas of 60
108 m3 [21]. Under the current technical and market conditions, domestic shale gas exploitation is featured by large input, high risk, long return period, slow effect and low profit; some local governments or non-oil companies regard shale gas as an important industry to gain commercial profit, which isn't a smart choice. 3.1.2. Rapid production of marine shale gas within the basin, and successful “testing ignition” outside the basin During the “12th Five-Year Plan” period, petroleum and petrochemical enterprises closely followed the progress of shale gas exploitation technology in the USA, and actively developed unconventional oil/gas business. They quickly initiated and increased the investment in the Paleozoic marine shale gas exploration and development in the Sichuan Basin, and finished the construction of three national marine shale gas demonstration areas (ChangningeWeiyuan, Fuling and Zhaotong) with an annual productivity of 75
108 m3. The great growth of shale gas reserves and production brought about the exploration and development technologies for marine shale gas below 3500 m and the profitable exploitation of marine shale gas. Nevertheless, in some deeply buried shale gas strata (below 3500 m) inside or around the Sichuan Basin or in the complicated tectonic areas, exploitation faces dual challenges of both technology and economy. According to the national shale gas resource investigation results [22], the central finance, local governments and bidwinning enterprises have invested more than RMB3 billion in shale gas exploration and development in South China with rich resources, in addition to the Sichuan Basin, including over 50 exploration wells. Unfortunately, there is no commercial discovery made, except for the lately reported Well Anye 1 [23] in northern Guizhou and a few exploration wells which delivered a little shale gas flow (not up to the standard of industrial gas well). Over 3e4 years, the efforts in many shale gas blocks remained to demonstrate “whether there is hot shale or not” and “whether the shale contains gas or not”, but no recoverable shale gas resources under the current technical and economic conditions were confirmed and no block of shale gas with commercial value was found. Facing the huge financial pressure and investment risk as well as “crop failure”, many shale gas enterprises were impaled in a dilemma and difficult to take a step. 3.1.3. No substantial breakthrough in the exploration of continental and marineecontinental shale gas When marine shale gas in South China advances intensively, the Geological Survey of China (GSC) and some prospecting and oil companies actively conduct shale gas exploitation in favorable zones of continental and marineecontinental facies with a great potential, which lives up to great expectations. In recent years, the drilling results in the CarboniferousePermian and TriassiceJurassic coal beds as well as lacustrine sand-mudstone in the southern North China, the Ordos Basin and the Sichuan Basin show that except some exploration wells with low-yield shale gas flow after

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fracturing, a great majority of wells only reveal “good gas shows in testing”, “high desorption gas or gas content” and “successful flaming or ignition” [21], with no substantial breakthrough. The Jurassic and Upper Triassic formations are key targets for continental shale gas exploitation in China. The Jurassic is dominant among all the formations with recoverable shale gas resources up to 5.54
1012 m3 [22], mainly in the northwestern China and the Sichuan Basin. In the Yan'an National Continental Shale Gas Demonstration Area, for example, there are tens of wells, but only half of them have obtained gas after fracturing; horizontal well production is generally only (0.4e0.8)
104 m3/d in testing, and the wells can't be put into formal development due to unstable production and quick decline; at present, only one gas well is producing for power generation [6,21]. This can be proved by the fact that this area is classified as an “evaluation breakthrough region” rather than a “key productivity building region” in the “13th Five-Year Plan” [1]. Well Chaiye 1, one of the important shale gas discoveries in 2014, is the first well drilled to develop continental shale gas in Jurassic in the Qaidam Basin [21], and it reveals three sets of shale interval with high gas content and cumulative thickness of 141 m, of which the site desorption gas content is up to 2e5 m3/t, the highest shale gas content is about 9 m3/t, and the core desorption gas is successfully “ignited”. According to the data of GSC, sand fracturing was carried out in two sets of gas-bearing shale with a total thickness of 60 m and the highest gas content, but there was no gas flow during the flowback. Some discoveries even found some wells (mostly unstimulated vertical wells) widely reported domestically with high yield of shale gas in continental or marineecontinental formations, which should be assigned to tight carbonate gas or tight sandstone gas, are collectively incorporated into the achievements of shale gas, since sandstone (or carbonate rock) and shale are interbedded or superimposed in continental or marineecontinental formations [9]. Although there were attempts on the shale gas exploitation in the Upper Triassic Xujiahe Fm and Lower Jurassic Ziliujing Fm in the Sichuan Basin during the “12th Five-Year Plan” period, and even the Jurassic continental shale gas exploitation in the Fuling block was earlier than that of the Longmaxi marine shale gas, no breakthrough has been made or no scale productivity has been built due to shale gas resource endowment, horizontal well fracturing, and production testing performance in continental formations. 3.2. Shale gas exploitation in the complex tectonic areas in South China During the “12th Five-Year Plan” period, 17 coal-fired power-dominated winners in the first and second rounds of bidding for shale gas licenses conducted shale gas exploration in 21 blocks covering an area of 2.4
104 km2. Particularly, 19 of these blocks were marine shale gas blocks in the complex tectonic areas in South China, outside the Sichuan Basin. Under the “13th Five-Year Plan”, key substituting blocks for future shale gas exploitation are concentrated in

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marine shale gas blocks in the complex tectonic areas in South China, with the target being unexceptionally the WufengeLongmaxi [1]. All these blocks are beyond their three-year exploration period, but no enterprise has completed (and actually cannot complete) its original exploration obligations, and two winners in the first round were even penalized economically. Practices show that these shale gas blocks are basically featured by presence of shale without gas, or no gas flow, or no commercial flowrate, and investment without return, making the enterprises impaled in the dilemma. In order to better arrange the work during the “13th Five-Year Plan” period and thereafter, it is necessary to review the exploitation operations over the past years and figure out the problems. 3.2.1. “Rich shale” meaning no “rich shale gas” One of the achievements in drilling geological information wells, reference wells and exploration wells in the shale gas blocks in South China lies in the wide distribution of black hot shale in the WufengeLongmaxi and Lower Cambrian Niutitang formations. In fact, such distribution was previously confirmed in field geological surveys and hydrocarbon prospecting, and a lot of research results in relation to black graptolite shale and source rocks were accumulated [24,25]. According to the drilling results in the “12th Five-Year Plan” period, the black hot shale (TOC  2%) in the WufengeLongmaxi and Lower Cambrian Niutitang formations in the complicated tectonic areas in South China is characterized by great thickness, high organic abundance, high evolution degree, and good reservoir physical properties, brittleness and gas-bearing potential. Therefore, these areas have good shale gas exploitation conditions and prospects [26e28]. Undoubtedly, some blocks are even comparable to the producing shale gas demonstration zones in the Sichuan Basin (e.g. Jiaoshiba in Fuling, Changning and Weiyuan) in terms of static geologic indexes, especially the high-quality Niutitang/ Shuijingtuo shale which has remarkable thickness and organic abundance (Table 1). However, rich shale doesn't mean rich shale gas. Numerous drilling results in the Youyang, Xiushan, Baojing, Fenggang and Zheng'an blocks show that the gas in the Niutitang hot shale is not methane but nitrogen. In the drilled blocks, the nitrogen content of almost 70% of Lower Cambrian black shale is more than 90%. Because of the complicated tectonic conditions in South China, gas presence in black shale is complicated. For example, Well Tianxing 1 in the Cengong block revealed a low-yield gas flow (with methane content ranging from 76% to 81%) through liquid nitrogen drainage and swabbing after vertical well fracturing in the Niutitang formation, while Well Tianma 1 about several kilometers away demonstrated a dominance of nitrogen (more than 95%) in the Niutitang formation. Furthermore, in some wells in Zhantong and Changning blocks, the Niutitang black shale has a low gas content (<0.5 m3/t) although it has a large thickness (40e50 m) and high organic content (TOC > 3% on average); the gas is mainly nitrogen, and no gas flows out after fracturing.

3.2.2. General existence of gas in shale but with limited recoverable resources According to the petroleum geologic theory, shale gas is the residual in-place gas after natural gas generated in source rocks under temperature and pressure conditions is expulsed and migrated (Fig. 4). Therefore, conventional oil/gas is also called “outside-source oil/gas”, and shale oil/gas is called “inside-source oil/gas”. Once source rocks reach a certain maturity, some residual gas always exists, no matter what the expulsion and transport conditions are. Accordingly, during the drilling operations of all shale gas wells, both inside and outside the basin, there are always oil/gas shows in the high GR black shale intervals, such as anomaly in gas logging, increased gas content and even well kicking, and other common phenomena such as gas flow-out when cores are taken out, bubbling in the water and ignition of gas desorbed on site. However, these ubiquitous “shale gas shows” are widely reported as great discovery or breakthrough that can prove the “presence of shale gas”. Theoretically, the “presence of shale gas” is not necessarily proved by wells consistently, but can be confirmed with basic oil/gas geology. The “presence of shale gas” should not be deemed as an indicator for success of shale gas exploration. The practices of marine shale gas exploitation in South China have proved that either good shows, or high gas content, or “successful ignition” doesn't mean industrial gas flow after fracturing. By far, many enterprises have carried out hydraulic fracturing tests in the target intervals with high shale gas parameters and good gas presence (Table 2), but haven't obtained industrial shale gas flow from either vertical wells or horizontal wells. The drilling of Well Wuxi 2 in the Dabashan arc fold thrust zone shows that hot black shale with TOC > 2% is nearly 90 m thick, including 51 m shale with TOC > 3%, and 59 m shale with gas content > 2 m3/t, and the highest gas content exceeds 8 m3/t [30]. Moreover, water boiling is observed after the core is soaked in water, and the gas-bearing potential is even better than that in the developed blocks (Table 1). However, the exploration wells deployed near Well Wuxi 2 by oil companies in recent years suffered geological complexities during drilling and failed to obtain any commercial discovery after horizontal well fracturing. In Well Qianye 1 drilled earlier near the Qianjiang block, “successful ignition” after fracturing was realized, but many wells drilled in this block and the adjacent Youyang block showed “outcrop failure”. The Niutitang shale buried at 3900 m in this block shows poor gas bearing, and a dominance of nitrogen (more than 84%); the first horizontal well drilled with 3D seismic data only produced trace gas after 16-stage sand fracturing and micro-seismic monitoring. In the Chengkou block, also in the Dabashan complex tectonic zone, many exploration wells show that the Lower Cambrian Shuijingtuo black shale has reservoir quality superior to all other blocks (Table 1); especially, its TOC is up to 30%, and its gas content occupies a leading position in the complex tectonic areas. Moreover, methane content is very high (more than 94%) in the Chengkou block, which is different from the Niutitang shale in other blocks where nitrogen content is high. However, there

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Table 1 Characteristics of hot shale in marine shale gas blocks in South China.a Block

Target

LaifengeXianfeng Baojing Baojing Xiangxi Huayuan Cengong Fenggang Chengkou ChangningeWeiyuan Fuling Jiaoshiba

WufengeLongmaxi 18e21 8e13 Niutitang 58 35 43e51 70e108 Shuijingtuo 40e100 WufengeLongmaxi 33e50 38e44

a b c

Thickness/m TOC

Porosity

Gas content/m3 t1

Quartz content

Max

Avg

Range

Avg

Range

Avg

Range

Avg

4.2% 4.3% 15.0% 4.0% 10.9% 6.7% 30.0% 7.3% 6.1%

e 2.7% 7.9% e 4.7% 6.7% 4.6% 2.7%/4.0%c 3.5%

2.9e4.0% 0.5e2.8% e 0.2e2.6% 0.02e4.1% 0.2e3.0% 1.0e7.0% 3.4e8.2% 5.0e7.8%

3.4% 1.5% 0.6% 1.2% e 1.1% 4.4% 5.3%/5.4%c 6.2%

0.2e3.7 0.2e4.5 0.1e0.7 0.8e2.4 1.0e2.8 0.04e4.1 1.8e8.6 1.7e6.5 4.0e7.7

1.7 2.2 0.4 e 1.7 2.1 4.2 2.9/4.1c 6.1

15.9e66.0% 55e67%b e 30e56% 31e62% 55e100%b 24e76% 16.7e67.6% 31.1e56.0%

39% 62.5% 81.8% e e 78% 43% 33.1%/41.1%c 41.9%

This table is compiled with references [26e29] and other data. Quartz þ feldspar content. Changning/Weiyuan.

Fig. 4. Pattern of hydrocarbon generation, expulsion and evolution and formation of shale oil/gas (according to the technical communication with Conoco Phillips, 2013).

was no exploration breakthrough in two wells with 7 hydraulic fracturing stages completed by the domestic and international oilfield service companies, and Well Chengtan 1 obtained nothing even after liquid nitrogen gas lifting and swabbing were conducted during the flowback (Table 2). Anyway, the Chengkou block is incorporated as a key shale gas project in the “13th Five-Year Plan” of a city, and the construction of ChengkoueKaixian shale gas pipeline with a length of about 10 km and an annual gas transmission capacity of about 2
108 m3 is planning [31]. The shale gas exploitation practices in the “12th Five-Year Plan” period also showed that the Lower Paleozoic marine hot shale in the complex tectonic areas in South China generally “contains gas which can't be produced through fracturing or can't be produced industrially”, as demonstrated by many examples. Even inside the petroliferous basin, some horizontal shale gas wells could not be put into normal production since they failed to meet the commercial production criteria, although they revealed shale gas flow with the flame height up to several meters during the fracturing test, and some producing wells had to suspend due to the sharp production

decline in a short period of time. Therefore, there is a great uncertainty and exploration risk if the shale gas resource prospect is evaluated or the favorable area is delineated in these areas in South China only by geologic parameters of shale, especially site desorption gas or gas content [26e28,30,31], whether the testing methods themselves are defective or not. As a result of multistage tectonic movements, these blocks suffered extensive deformation, leading to welldeveloped folding faults and poor shale gas conservation conditions, and excellent conducting conditions allowed the escape of most residual free gas in the shale. Thus the scale of resources in these blocks is small and the development potential is not large [9]. 3.2.3. Complex tectonic areas meaning no favorable areas for shale gas exploitation As is known, although shale gas is generated, preserved and continuously accumulated in the same set of formations, it still follows the basic rule of oil/gas accumulation, namely, except for the migration and trap conditions, all source rocks, reservoir rocks, caprock and preservation conditions should be

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Table 2 Shale gas content and hydraulic fracturing test results in the complex tectonic areas in South China. Block

Formation

Target interval depth/m

Shale core gas content/(m3 t1) Max

Avg

900e950

3.73

1.72

Nanchuan

4370e4410

4.38

e

Qianjiang

2580e2620

4.43

1.20e2.10

Baojing

2700e2770

4.51

2.21

Longshan

1890e1920

2.04

1.07

2645e2720

4.13

2.07

1760e1820

2.77

1.70

1600e2600

8.60

4.20

LaifengeXianfeng

Fenggang

WufengeLongmaxi

Niutitang

Cengong

Chengkou

Shuijingtuo

available. Research shows that the Lower Paleozoic marine shale in South China has suffered intense reformation due to multistage tectonic movements from Caledonian to Himalayan since it was mature enough to generate hydrocarbons. Obviously, neither conventional gas reservoir nor unconventional shale gas reservoir could be well preserved in such a long history of evolution if there were no good sealing and relatively stable tectonic environments. This has been demonstrated by the exploration of marine oil and gas in South China since the mid-20th century. The development potential of shale gas resources mainly depends on the endowment of resource in hot shale formations integrating source rocks, reservoir rocks and caprocks, while the hot shale formations are directly influenced by the hydrocarbon generation & expulsion pattern and conducting conditions of the shale [32]. When a faulting system is available, the excellent conducting conditions allow the expulsion of a large quantity of oil/gas, leaving less residual shale gas resources that can be exploited. Thus shale gas potential distinctively drops. On this basis, EIA's first report on world shale gas resources [33] classified the complicated tectonic areas such as deep large faults and thrust fault blocks as high risk areas of shale gas exploitation. That is also a critical reason that there is no commercial progress of marine shale gas exploration in the complex tectonic areas in South China regardless of investment with several billions of CNY (although the authors have pointed out high risk of exploitation in these blocks and the resulting waste of social resource [9]). This occurs in not only the licenses in the first and second rounds of bidding, but also a batch of shale gas wells deployed by some oil companies and GSC in the complex tectonic areas in South China. Ding and Liu [34] made a series of researches on the tectonics in South China and revealed that due to the giant

Results of hydraulic fracturing test

Through fracturing and micro-seismic monitoring, Well Laiye 1 produced no gas flow after well killing for five days Through 14-stage fracturing, Well Nanye 1HF produced lowyield and non-industrial gas flow Through 16-stage fracturing and micro-seismic monitoring as well as liquid nitrogen drainage and swabbing, Well Zhaiye 1HF produced only trace gas flow Through fracturing, Well Baoye 1 produced gas 500e1600 m3/ d, non-industrial Through fracturing and micro-seismic monitoring as well as liquid nitrogen drainage and swabbing, Well Longcan 2 produced gas of about 1000 m3/d, non-industrial Through 2-stage fracturing, Well Yongfeng 1 produced no gas flow Through fracturing as well as liquid nitrogen drainage and swabbing, Well Tianxing 1 produced only low-yield gas flow, non-industrial Through 5-stage fracturing as well as liquid nitrogen drainage and swabbing, vertical well Chengtan 1 revealed flame of 0.2 e0.6 m high in intermittent ignition

collision and extrusion during the IndosinianeYanshan movement, the JiangnaneXuefeng basement detaching belt was formed in the southeast of Yangtz plate and override from the southeast to northwest, leading to the progressive deformation from early to late, from deep to shallow and from strong to weak (Fig. 5). Therefore, from the JiangnaneXuefeng uplift front to the Qiyueshan at the eastern margin of Sichuan Basin, the areas in the whole Wulingshan, western HunaneHubei and southeastern Chongqing are attributed to the intensive-strong deforming belt of constant extrusion and multistage superimposition. In these complex tectonic areas with trough fold deformation, the anticline is gentle, but the Lower Paleozoic shale has been outcropped or has suffered erosion, and at the core a horizontal (oblique) fault exists. Therefore, shale gas drilling has to be deployed in the narrow syncline area. However, the trough syncline is narrow and close due to strong deformation, and the core formation varies greatly and develops multistage longitudinal deep large faults [35], resulting in the infiltration of surface water and pressure seal system damage, thus the shale gas sealing condition is unquestionably poor. Although there is some residual shale gas in the undamaged syncline area (such as Sangtuoping syncline in the southeastern Chongqing, and Anchang syncline in the northern Guizhou [23]), shale gas resources are definitely limited, bringing about great economic risks for shale gas exploitation. Exploration practices show that multistage multi-cycle structural extrusion resulted in shale gas escape, decompression and sealing problems, which becomes a key factor restraining marine shale gas exploitation in the complex tectonic areas in South China. Drilling results in the complex tectonic areas in South China show that shale cores are generally broken due to the well-developed fault system, and the hot shale thickness

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Fig. 5. Section of progressive deformation structure inside the Yangtz plate (HuayingshaneLoudi) (note: slightly simplified according to Ref. [34]).

(10e20 m) and average gas content (1e2 m3/t) in some blocks, especially near the Xuefeng uplift front, are generally lower than those in the blocks inside the basin (Table 1), where the shale gas resources even cannot reach the standard of favorable blocks [32]. In addition, because of strong fold deformation and severe fault cutting as well as target formation well conserved in the narrow steep synclinal valley, a lot of engineering problems and high cost occurred during drilling and completion of wells in the complex tectonic areas. In the shallow Permian and Triassic of the blocks carbonate karst caves and underground rivers develop, which causes heavy mud loss during drilling. For example, in the Qianjiang block, two wells suffered mud loss of ten thousand cubic meters; although an advanced rotary steering system was adopted during horizontal well drilling, due to geological complexities (for example, frequent encountering of fault and great variation of dip angle made it impossible to maintain the target location), the drilling of 1000 m horizontal interval was finally finished in about half a year with the support of 3D seismic data. Furthermore, the fracturing results of horizontal shale gas wells are often poor in the fault areas, because even a small fault can transfer or drain the huge fracturing energy. The more the faults are, the more the potential leaking belts are, and the poorer the fracturing effect is [36]. Therefore, except for shale gas resource conditions, engineering problems in drilling and completion are another reason for the poor effect of shale gas exploitation in the complex tectonic areas. 3.3. Problems and challenges in shale gas exploitation in complex tectonic areas The above analysis shows that both potential and commercial value of shale gas in the complex tectonic areas in South China are very limited in terms of geological conditions, or resource endowment, or engineering conditions. So, these areas should not to be regarded as favorable shale gas exploration areas for large-scale bidding. This explains why there is no commercial discovery and shale gas production up to now in the complex tectonic areas in South China as in the Sichuan Basin. Additionally, shale gas exploitation in the complex tectonic areas also faces the following technical and nontechnical challenges.

3.3.1. Effective exploitation coverage In the delineated 1000e2000 km2 exploitation blocks for bidding, there are huge ineffective areas, such as shale formation erosion or outcrop areas, natural reserve areas (e.g. the 440 km2 Jinfo Mountain World Natural Heritage Reserve in Chongqing Nanchuan block, which accounts for about 20% of the block coverage), forbidden area and townships, even massive volcanic rock areas (e.g. Zhejiang Lin'an block). Thus the actual effective exploitation coverage is small, and in some blocks such as Chengkou, it is less than 50% of the total coverage. Obviously, it is very difficult to finish the investment and obligations under the bid, although the blocks are classified as favorable areas with rich shale gas resources. As was reported, about RMB12.8 billion was required for 19 shale gas blocks in the second round of bidding in the three-year exploration period. However, after the exploration period, all the shale gas operators had to face the predicament of “drawing water with a sieve”, namely, they could not accomplish the committed investment and obligations due to limited favorable areas for exploitation, poor drilling and fracturing effect, difficult selection of drilling target, and difficult and expensive drilling, especially in the Qianjiang block where RMB1.7 billion was needed for exploitation. If the penalty is imposed as the first round of bidding, these enterprises will suffer a miserable destiny. 3.3.2. Drilling difficulties caused by ground and underground conditions The complex tectonic areas in South China mostly belong to fold mountains with ravines and gullies, where karsts and complex fault structures are developed, and formations are steep and even inversed, bringing great challenges to shale gas well drilling and completion [9]. The geographic and geomorphic conditions are very poor with alternate high mountains and deep valleys, thus the burial depth of target formations can be zero to 4000 m or deeper. It is difficult to select proper sites for drilling and exploration, let alone the subsequent deployment of “factory” platform wells. Due to strong deformation and faulting development, there are dense deep great faults cutting upward the surface (such as more than 20 reverse faults of different structure stages in the

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3rd block of Fenggang in Guizhou), causing difficulties in the seismic horizon tracing and structural interpretation. Hence drilling results are dramatically different from the drilling design, and sometimes some wells must be abandoned since they have not reached the target formations because of complex geology. Due to narrow and steep syncline with dip angles being more than 60 at two flanks, lateral tracing is very difficult in a range of more than 100 m (such as Chengkou block), and deployment and drilling should be adjusted at any time, resulting in great pressure on the HSE management. In some blocks, 3D seismic survey has to be implemented ahead of schedule to ensure that horizontal well drilling under the circumstances of no gas discovery, thus both exploration cost and risk increase. Even so, drilling still fails to get the expected results. 3.3.3. Basic prospecting conditions Generally, although a lot of ground geologic survey and oil/ gas prospecting have been completed, some complex tectonic areas in South China are less explored or even not explored. In these areas, there are inadequate basic data such as drilling, seismic, logging and core analysis, or no matching infrastructures such as pipeline networks. The delineation of favorable areas and selection of bidding blocks mainly depend on ground geologic data and the estimation of shale gas resources [22], but the underground geology of the bidding blocks is basically unknown, and there is a lack of share mechanism of exploration data. Shale gas exploration in these blocks starts from the scratch, suggesting that it is a time and expense consuming task. This problem is extremely prominent for those newly established shale gas companies. 3.3.4. Scale of shale gas exploitation Exploitation practices over three years show that Type I and II favorable areas generally account for 10e30% of the total block coverage, and these deemed favorable areas for which further work is required are delineated to retain the license. Therefore, most of them are of no shale gas exploration value, nor of commercial development value, having not (recoverable) shale gas resources. Even though certain discoveries can be made through further exploration, the scale of shale gas exploitation is uncertain. In such a situation, commercial exploitation cannot be realized, which makes it difficult for those enterprises to survive due to a giant investment in shale gas exploitation. The shale gas exploration wells in the complex tectonic areas in South China are basically deployed in the syncline of trough structure zones. This is a helpless choice because the target shale formation on the anticline is mostly outcropped or shallowly buried (where geologic data wells are mostly deployed). The shale is well-preserved in the syncline, but strong deformation and limited distribution determine the small range for shale gas exploration, and the WufengeLongmaxi shale exploration is limited to the surface Permian and Triassic carbonate rock areas. This is an objective cause for favorable exploration areas occupying less than half of the total coverage.

The related data show that Pengshui was the only block with shale gas production in the complex tectonic areas in South China during the “12th Five-Year Plan” period. Shale gas exploitation in Pengshui block started earlier than the Jiaoshiba bock. However, due to its location in the complex tectonic areas of southeastern Chongqing, four low-yield wells commissioned successively in the Sangtuoping syncline (testing production of 1.0
104e3.5
104 m3/d) only realized an annual production of several million cubic meters. It is concluded that the exploitation scale in the block is very limited and the economic value is not worth mentioning. According to the shale gas industry development plan [31], the annual shale gas production in this block will amount to 15
108 m3 at the end of the “13th Five-Year Plan” period. It is undoubtedly a very heavy task. According to other reports, some companies obtained “four-story” natural gas and shale gas breakthroughs in the Qixia, Shiniulan, WufengeLongmaxi and Baota formations in Well Anye 1 in northern Guizhou, which were appraised as “historical, milestone and innovative” achievements, or even as “making the sixty-year petroleum dream of China's geologists and Guizhou people come true” [23]. In fact, among the Lower Paleozoic oil assemblies with multiple series of layers in the Sichuan Basin, some wells revealed Baota limestone gas in such structures as Dongshan and Hewanchang from the 1970s to the 1980s. For example, in Well Dongshen 1 an open flow of 96
104 m3/d was realized without any stimulation measures, and many wells in the southern basin generally showed gas invasion, gas kicking and blowout in the Shiniulan and Hanjiadian limestone, sandstone and mud shale. In Chishui of Guizhou, wells on the Taihechang, Wanglongchang and Guandu structures have produced Permian and Triassic natural gas and Jurassic oil, and also many wells in the Shiniulan and Hanjiadian on the Taihechang structure have revealed good shows. For example, Well Tai 13 experienced strong blowout in four intervals of bioclastic limestone and siltstone from 3054.5 m to 3300.0 m; the tested production was (6e10)
104 m3/d in one interval, and the open flow was (3e5)
104 m3/d in two intervals, with the formation pressure of 52e66 MPa and pressure coefficient of 1.65e2.06. However, carbonate and sandstone gas belongs to fractured gas reservoirs with small development scale. For example, from 1971 to 1989, there were 15 gas wells producing Permian and Triassic gas in the Taihechang and Wanglongchang gas fields in Chishui area, but the cumulative production was only 6.93
108 m3 [37]. In contrast, among the four oil assemblies discovered in the Anchang syncline in northern Guizhou, the Shiniulan and Baota carbonate rock gas seems to have the features of fractured reservoirs, whose developing prospect should be confirmed by further commitments such as appraisal well drilling and gas well production testing. Although the site desorption gas content of Longmaxi shale is high (up to 6.49 m3/t), no fracturing test has been conducted, thus exploration is limited in the Anchang syncline with a coverage of only 100 km2. Moreover, the favorable area of anomaly pressure by seismic prediction is only 15.7 km2 [23], so the resource scale is clear.

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It was reported that the Ministry of Finance has invested RMB800 million since 2014 in deploying more than 50 wells in the complex tectonic areas in South China, and now the “public welfare” shale gas drilling is being carried out in the western Hubei and Wulingshan. The authors propose that finance should be focused on one shale gas block with weak structure deformation and good conservation conditions under the direction of “three-in-one” shale gas accumulation theory in China [23], rather than shale gas drilling in a wide range. In this way, shale gas exploitation in the complex tectonic areas in South China can be led practically during the “13th FiveYear Plan” period and the goal of shale gas production under the “13th Five-Year Plan” can be realized. 4. Some concerns for the future shale gas development in China Chinese President Xi Jinping pointed out in 2016 that “a problem can initiate and trigger an innovation”. In order to make the “13th Five-Year Plan” and future plans meet the reality, it is required to summarize the available achievements and favorable conditions and also think about the problems of and adverse impacts on the development. 4.1. Replacement of shale gas producing areas As mentioned above, the major factors restricting the future shale gas development are not policies or government supports but domestic shale gas resources, exploitation technologies and cost. According to the successful “shale gas revolution” in the USA, a great increase of shale gas production depends on the discovery of new measures, new blocks and new gas plays. From the earliest discovered five shale gas plays such as Ohio to the current nine producing shale gas plays including Marcellus (annual production of 30
108e1500
108 m3 for each play, and the pay zones ranging from Ordovician to Cretaceous, as shown in Fig. 2), shale gas production in the USA has increased sharply from less than 100
108 m3 at the end of 20th century to nearly 4000
108 m3 now. According to the particular production decline rule of shale gas, it is difficult to maintain the current shale gas production in China if there are no new measures and new blocks, and in the future the upper-stage yield target is hard to realize. There are more than 20 sets of hot shale in three types (marine, continental and marineecontinental transitional facies) in China [6], but only the WufengeLongmaxi shale gas of marine facies in the Sichuan Basin is commercialized after the largescale exploration during the “12th Five-Year Plan” period. In the “13th Five-Year Plan”, the “key shale gas capacity building areas” are only limited in the WufengeLongmaxi in the Sichuan Basin. Within these areas, the range of proved shale gas plays is limited (such as Fuling Jiaoshiba, 383.54 km2; ChangningeWeiyuan, 207.87 km2). Thus the “13th Five-Year Plan” has to focus on the deep formations with complex structures to realize production increase. Even the high-quality shale gas fields such as Fuling (proved reserves abundance: 9.92
108 m3/km2) will comply with the rule of rapid

71

production decline in three years generally existed in North America, and the new wells to be drilled cannot copy the brilliance of old high production wells in the prospective area. Under the limited shale gas block coverage, the blocks for phase II development of Fuling present deeper shale gas formations (3000e4000 m), more complex structures, higher development cost, more difficulties and risks than those for Phase I. Comparison of the evaluation results of marine, continental and marineecontinental transitional shale gas shows that marine shale areas are the most prospective. Except for WufengeLongmaxi, the marine hot shale in other formations should also be paid attention to, especially the MiddleeLower Ordovician Meitan/Dawan and Miaopo graptolite black shales that were deposited under the similar environment to WufengeLongmaxi and the Upper Permian Dalong black siliceous shale. In addition, the wide-spread Qiongzhusi/Niutitang hot shale in the basin has been proved to be a set of industrial gas zone, but it is difficult to be developed due to its great burial depth and complicated geologic conditions. 4.2. Exploitation of deep shale gas Through shale gas research and tests in the “12th Five-Year Plan” period, exploitation technology for shale gas below 3500 m has been basically matured in China, but horizontal well fracturing technology and facilities for this kind of shale gas have not progressed remarkably [1,5]. In Weiyuan, Fuling, and FushuneYongchuan blocks, the production performance of deep shale gas is obviously worse than that of shallow gas. For example, in FushuneYongchuan block, where the WufengeLongmaxi shale is generally buried below 3500 m, the first vertical well and first horizontal well realized the highest production of 6
104 m3/d and 43
104 m3/ d respectively during fracturing test, but the ten wells drilled later could not copy the success of the first wells. The shale gas resources in this block approximate that in the ChangningeWeiyuan demonstration zone [6], but the deep ultra-high pressure conditions result in difficult exploitation, high cost and testing problems and cause the production to halt at 2
108 m3 in four years of the first shale gas PSC block in China, and the development result is far less than the expectation of the operator. Dingshan, Nanchuan and other blocks also encounter the challenge of deep ultra-pressure engineering technology and fracturing stimulation facilities, where the development potential also depends on the breakthrough of deep shale gas developing technology. Domestic shale gas resource evaluation results show that the deep shale gas resources buried below 3500 m account for more than 65% of the total [5]. In the southern Sichuan Basin, the favorable coverage of Qiongzhusi and WufengeLongmaxi shale gas buried below 3500 m accounts for 94% and 82% of the total area respectively. If effective technology for deep shale gas exploitation is developed, the E&D domain of shale gas will be expanded greatly, and the production of shale gas within the basin will grow substantially, bringing about a good production replacement sequence. This is a key and hope for the shale gas production increase during the “13th Five-Year Plan” period.

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4.3. Prospect of non-marine shale gas resources There is no breakthrough in five-year exploration of continental and marineecontinental transitional shale gas which was highly expected and forged as the China-characteristic resource. The evaluation results of exploration in the “12th Five-Year Plan” period show that from the prospective of shale reservoir quality (RQ) or completion quality (CQ), non-marine shale gas resources are inferior to marine shale gas (Table 6 in Ref. [6]). This causes the poor development effect in the mentioned two types of shale gas. In the first ChinaeUS cooperation shale gas project in 2012, USGS provided a lower-than-expected evaluation on the marineecontinental transitional shale gas resources in the east sag of Liaohe, and EIA (2013) and CNPC Research Institute of Petroleum Exploration and Development (CNPC RIPED) also got a notoptimistic result of recoverable continental shale gas resources (Fig. 6). This has been proved by the exploration in the “12th Five-Year Plan” period. Specifically, several continental shale gas blocks like east Liaohe and ChuanxieLangzhong, which were incorporated into 19 key E&D blocks in the “12th FiveYear Plan”, are not found in the “13th Five-Year Plan” [1]. The hydrocarbon generation and expulsion assemblages in lacustrine and coal-measure formations are more favorable for oil/gas expulsion and migration [9,32], so a higher oil/gas expelling efficiency will definitely restrict the exploration potential of the “inside-source” oil/gas (Fig. 4). On the contrary, the “outside-source” tight sandstone gas or carbonate gas or even coalbed methane in the lacustrine and coal-measure formations should be the primary target for unconventional oil/gas exploration. During the “12th Five-Year Plan” period, some shale gas discovered in the CarboniferousePermian of South Huabei Basin and the Ordos Basin as well as the Upper Triassic and Jurassic in the Sichuan Basin mostly belongs to tight sandstone gas or carbonate gas [9]. Compared with the evaluation results in 2012, the continental and marineecontinental transitional recoverable shale gas resources estimated by the Ministry of Land and Resources (MLR) in 2015 were about 50% less, but still up to 9
1012 m3 (Fig. 6). During the “13th Five-Year Plan” period, proper blocks should be selected for pilot test of shale gas exploitation with consideration to the unique geology of non-marine shale gas,

in order to make a realistic evaluation on the prospect of nonmarine shale gas. 4.4. Prospect of Lower Paleozoic shale gas resource in South China In the E&D practices in the “12th Five-Year Plan” period, breakthroughs were made in only marine shale gas in the Sichuan Basin. In the “13th Five-Year Plan”, the favorable production blocks are confined mainly to marine shale gas areas in South China [1], based on a shale gas resource evaluation result. According to the latest evaluation result (2015) of the Ministry of Land and Resources, the recoverable resources of Lower Silurian and Lower Cambrian marine shale gas reservoirs in South China account for 87% of the total in China, while the Sichuan Basin and the complex tectonic areas in South China share 39% and 61% respectively in two sets of shale gas reservoirs in Lower Paleozoic. Clearly, in view of only the recoverable shale gas resources, the prospect in the complex tectonic areas in South China seems to be higher than that in the Sichuan Basin. However, the actual exploration and development effect is not the case as mentioned above. As is known, shale gas presents regional continuous wide distribution, and the gas play range is always delineated by high GR hot shale distribution, thus the resources are huge (up to trillion cubic meters). Therefore, the evaluation and prediction of shale gas prospect should focus on “quality” instead of “quantity”, namely, on the commercial value of shale gas. Considering only the shale gas resource evaluation results, if a shale area proved to be of no commercial value by numerous drilling and fracturing tests is deemed favorable for further exploration and development, it is not only contrary to the practice rule but causes unnecessary loss to development enterprises. From 2009 to 2012, in order to learn the shale gas developing experience from North America, some Chinese oil companies conducted collaborative assessment upon the shale gas potential in the peripheral tectonic areas of Sichuan Basin with Exxon, Chevron and Shell, but due to poor drilling results and small resource potential, these IOCs withdraw from the blocks one after another. In terms of the shale gas resource potential in the complex tectonic areas in South China, current

Fig. 6. Recoverable shale gas resources in China estimated by different organizations.

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concerns are neither about the resource quantity nor about the shale gas existence but about the efficient development of shale gas in the areas with horizontal well drilling and hydraulic fracturing technologies. Otherwise, no matter how much the investment is, shale gas production and commercial return will not be realized. 4.5. Shale gas exploitation cost Under the circumstances of tumbling oil prices in recent years, the stable growth of oil/gas production in the USA has mainly benefited from the low-cost and high-efficiency development of shale oil/gas, and the constant technical progress is the main way to achieve the goal. The effective improvement of hydraulic fracturing technique, optimization of well completion design and application of multi-well platform greatly improve the drilling efficiency and single well production and greatly reduce the shale oil/gas exploitation cost [13]. In recent years, through the progress of platform well producing, the tested production of gas wells in the ChangningeWeiyuan demonstration zone has increased by nearly 35%, preliminarily realizing the profitable development of shale gas. As was reported, the oil breakeven price of the major shale oil/gas plays in the USA, such as Bakken and Marcellus, can be lower to USD30e40/barrel and USD3e4/1000 ft3. At present, the shale gas producing cost of domestic oil companies in four blocks of Sichuan Basin is higher than that in the USA [5]. Besides the difficult development and high cost caused by complicated geology, the development is constrained by shale gas developing scale and service marketization insufficiency. In terms of domestic shale gas development, scale means profit. From the view of shale gas development in the Sichuan Basin, only when production reaches the scale of Jiaoshiba and Changning shale gas blocks (shale gas buried at about 2500 m), shale gas can be developed profitably. Vigorous cultivation of the third-party service market and increase of multi-channel supply and service of drilling and facilities are also an effective way to reduce the shale gas development cost. 5. Conclusions 1) Since many problems exist in shale gas development in the complex tectonic areas in South China, such as great risk and low scale merit, efforts should not be made blindly to “increase the investment in shale gas exploration and accelerate sale gas prospecting”. 2) For the non-oil companies without petroleum exploration and development technology and experience, it is a real reluctance to regard the complex tectonic areas in South China as the first threshold into the oil/gas domain. All the shale gas blocks in such complex tectonic areas are basically characterized by presence of shale without gas, or no gas flow, or no commercial flowrate, and investment without return, so it is suggested to waive the economic penalty on the enterprises that fail to accomplish the bidding commitment and investment.

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3) It should be cautious to launch more shale gas blocks for bidding in the future, especially in the complex marine tectonic areas in South China, where there is no oil exploration base and facility or the shale gas resource endowment is low. 4) Shale gas production in China will go up a few steps in the coming five years from less than 50
108 m3 in 2015 to 300
108 m3 in 2020. The goal can be achieved under two preconditions. First, the developed shale gas blocks can continue their high stable production or make up for the decline of old wells by drilling new wells, and the new wells are expected to copy the high production of old wells or new stimulation technology is adopted to further tap the potential of old wells. Second, and the most important, a new batch of shale gas replacing zones/blocks are discovered and put into scale development. These are also a resource basis to maintain the stable development of shale gas in the USA under the tumbling oil prices. 5) The deep shale gas resources buried below 3500 account for more than 65% of the total in China. In the southern Sichuan Basin, where the Lower Paleozoic marine shale gas resources are the enrichment, the shale gas buried below 3500 m is dominant. The development of deep shale gas exploitation technology is the key and hope for the shale gas production growth in the “13th Five-Year Plan” period. 6) In terms of the future and the prospect of shale gas industry in China, the issues of risk and scale profit in shale gas development should be envisaged prudently and scientifically, and the experience and lessens should be summarized from exploration failures in many blocks during the “12th Five-Year Plan” period. Moreover, more efforts should be exerted on the geological evaluation of shale gas and the developing engineering technologies, the basic procedures of shale gas exploration and development should be followed, and the realistic industry goal should be established rationally. In this way, a sustained and healthy development of domestic shale gas industry can be ultimately realized.

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