(Yicai Global) Aug. 26 -- PetroChina has discovered shale oil reserves reaching nearly 1.3 billion tons in the country's largest oilfield to replenish its diminishing oil and gas output via emerging, yet expensive technologies.

Several shale oil wells in the 1,413 square kilometers of the oil-bearing area achieved high yields in test production, a person in charge in the Daqing Oilfield in northeastern China's Heilongjiang province said at a press conference yesterday.

China is looking for ways to increase its oil and gas output via unconventional techniques as the country's biggest oilfield is generating less fuel after almost 60 years of exploitation.

The Unconventional Resource

PetroChina needs to further strengthen its scientific and technological research and management innovation to exploit shale oil effectively, said the person working for the listed arm of state-owned China National Petroleum. The team has made some progress in mining theory and technology in recent years.

The targets are ambitious. The goal is to achieve trial production of 100 shale oil wells this year, according to the oilfield management. Some 58 wells are already drilled and 25 of them have had oil. PetroChina aims to produce more than 1 million tons of shale oil each year by 2025.

But the costs are high. There is no accurate method of calculating the cost of exploitation, an industry insider told Yicai Global. The cost should be lower than USD45 per barrel to be economically viable if crude oil futures are priced at about USD65 per barrel. But currently, shale oil would be more expensive, the person added.

The latest discovery is in the Gulong formation, the most difficult to exploit, and without precedent for large-scale commercial development, said Zhu Guowen, vice president of PetroChina.

The Buried Treasure Trove

China’s shale oil resources rank third in the world, after Russia and the US. However, the Asian country's technically recoverable resources tally nearly 4.4 billion tons, accounting for about 6 percent of the world’s total. The unconventional type of oil is often found in underground rock formations at great depths in remote regions.

But the reward is alluring. One of the new wells, Guyeyouping 1, has yielded almost 10,000 tons of oil and gas equivalent since Feb. 21, 2020. Its daily output has been around 13 tons of oil and more than 13,000 cubic meters of gas, or 10 times the current daily output of a single well in the Daqing Oilfield.

Editor: Emmi Laine, Xiao Yi