China’s upstream sector remained active up to and beyond the Chinese New Year, with a high profile gas discovery and a gas hydrates find as well as unconventional drilling and big spending plans being reported in quick succession.

On the exploration front, state-owned PetroChina discovered 10.88 Tcf of technically recoverable gas in southwest China’s Sichuan basin, according to parent China National Petroleum Corp. (CNPC), making the find one of China’s largest gas discoveries in more than 10 years.

The proven gas in place in the Longwangmiao formation of Cambrian system in the Anyue field in the Moxi block was officially certified to hold 15.55 Tcf of proven geological reserves, CNPC said via PetroChina’s Exploration and Development department.

“This is the largest monomer marine uncompartmentalized carbonate gas reservoir discovered in China up to now, featured by large reserve scale, broad gas-bearing areas, high formation pressure, high gas flow, and superior gas components,” CNPC added.

PetroChina is now building a production facility that will have a capacity to produce 141.2 Bcf a year under Phase 1 of the development. This will ramp up to 353.0 Bcf during Phase 2, CNPC said.

CNPC did not give a timeline for the development or reveal a budget for the project.

Gas Hydrates Find

Researchers at Beijing Gas Group Co. recently discovered a major gas hydrate reserve in the northern part of the South China Sea.

China’s Ministry of Land and Resources (MLR) said it had found a gas hydrate accumulation that covers 22 sq miles in the Pearl River Mouth basin, with controlled reserves equivalent to between 3.53 Tcf and 150 5.30 Tcf of natural gas.

Those reserves mean the hydrates field is equivalent to a major conventional natural gas field, such as in China’s Sichuan province.

Guangzhou Marine Geological Survey Bureau, a unit of MLR, collected samples of “high purity” gas hydrates over nearly four months of surveys and drilling of 23 wells in the waters off south China’s Guangdong province.

Two gas hydrate layers with a thickness of 49 ft. to 98 ft were found just below the seabed at a water depth of 1,969 feet to 3,281feet.

“It marks a breakthrough in investigating the resource and proves that the Pearl River Mouth basin is rich in gas hydrate,” said MLR, adding China is now the fourth country in the world to have collected samples of the methane hydrate after the US, Japan, and India, while other countries like Canada and Norway are researching the potential of the fuel.

There is no technology to commercially produce hydrates, which are gas frozen in ice-like crystals buried deep under the oceans.

“Commercial production of the resource will begin in China’s tundra around 2020, and underwater around 2030,” said Che Changbo, deputy director of the geological exploration department of MLR, adding commercial production will help ease the country’s dependence on oil and coal.

CNOOC Pushes Forward

CNOOC Ltd. has unveiled its business strategy and development plan for 2014 – with nearly US $20 billion being spent this year.

The operator’s net production target of 2014 is in the range of 422 MMboe to 435 MMboe, including around 69 MMboe as a result of the acquisition of Nexen. During 2014, the company expects seven to 10 new projects to come onstream.

The company also has an extensive exploration program this year. Plans are to drill around 155 exploration wells and acquire approximately 16,591 miles of 2-D seismic data and approximately 7,490 square miles of 3-D seismic data.

Within the year, the company will continue to strengthen deepwater exploration. The company is targeting a reserve replacement ratio (RRR) of more than 100%.

CNOOC also reported that the Liuhua 19-5 gas field offshore China has started production. Liuhua 19-5 lies in the Pearl River Mouth basin in the South China Sea at an average water depth of 606 ft. This project was designed to share the existing producing facility of the Panyu 30-1 gas field, and two new producing wells were drilled, CNOOC Ltd. said. Liuhua 19-5 is expected to reach peak production of 29 MMcf/d during 2014.

Production from the Qikou 18-1 oil field adjustment project offshore eastern China also has started. The operator is adding two production platforms and a processing facility to the shallow water field, which lies in the western part of the hydrocarbon-rich Bohai Bay.

CBM Output Rises

China’s coalbed methane (CBM) sector continues to make strides, with U.S. player Far East Energy, which operates the Shouyang block production-sharing contract (PSC) in Shanxi Province, reporting a continued rise in gas production from the block since late January. Gas production at the Shouyang block reached 2.03 MMcf/d by Feb. 11. This is an increase of 13% from the production figures from Jan. 22.

Meanwhile, Green Dragon Gas also recorded a significant increase in production during 2013. The operator produced nearly 7.2 Bcf of gas in 2013, compared to about 1.8 Bcf in 2012.

Green Dragon’s chairman Randeep S Grewal said production for 2014 was expected to be even higher. The company recently quadrupled the proven reserves estimated to be held within its Chinese blocks to 300 Bcf of gas as a result of drilling by its Chinese partners since January 2013.

Green Dragon has taken on Greka Drilling to drill 10 of the 150 CBM wells the operator has planned for 2014. The work, worth approximately $15 million, will involve moving five rigs to the site in February.