Development situation and prospect of natural gas in China

China's supply and demand of natural gas continue to increase

Natural gas reserves are growing at their peak, and the proportion of unconventional resources is increasing. China's natural gas resources are 172 trillion cubic meters, the resource base is strong, but the proved degree is low, and the overall exploration is in the early and middle period. Since 2000, China's natural gas reserves have maintained peak growth, with an average annual increase of 732.8 billion cubic meters of proven natural gas reserves. By the end of 2021, China had submitted a total of 17.05 trillion cubic meters of proved reserves, of which conventional gas accounted for 53%, tight gas accounted for 32%, shale gas accounted for 11%, and coalbed gas accounted for 4%. The new proved reserves are large, but mainly low-grade reserves such as unconventional and deep deposits.

Natural gas production has increased rapidly, and Sulige has entered the ranks of the world's largest gas fields. Since 2000, China's natural gas development has entered a period of rapid development, with an average annual growth rate of about 10%, reaching more than 220 billion cubic meters in 2022. At present, it has built four natural gas production bases in Ordos, Tarim, Sichuan and Haihai. China's oil and gas output rose from 18.3 billion cubic meters in 2000 to 145.3 billion cubic meters in 2022, accounting for 66.05% of the country's natural gas output. At present, CNPC has built a 50 billion cubic meter super gas zone - Changqing gas zone and two more than 30 billion cubic meter atmospheric zones - Southwest, Tarim gas zone. In 2022, the output of Changqing Sulige gas field will reach 30.56 billion cubic meters, becoming the only super gas field in China with an annual output of more than 30 billion cubic meters, and entering the ranks of the world's top ten super large gas fields.

Natural gas consumption continued to flourish, and its dependence on foreign countries was effectively controlled. In 2018, China produced 160.1 billion cubic meters of natural gas, its apparent consumption was 280.3 billion cubic meters, and its dependence on foreign natural gas was 45.3 percent. In 2022, China's natural gas production is 220 billion cubic meters, the apparent consumption is 366.3 billion cubic meters, and the external dependence of natural gas is less than 41%. Four years, in the case of natural gas consumption increased by 86 billion cubic meters, foreign dependence decreased by more than 4%, mainly due to the rapid growth of domestic natural gas production in recent years. Over the past four years, the net increase of domestic natural gas was 60 billion cubic meters, and the decline in external dependence was beyond most experts' forecasts.

In the future, China's policy of increasing domestic storage and production will not change, vigorously develop the natural gas industry, take natural gas as a bridge to achieve green transformation, and promote the development of unconventional natural gas will become the main force for increasing storage and production.

The development of natural gas promotes the transformation of energy structure. Compared with the world level, the proportion of natural gas in primary energy consumption in China is low, but the particularity of energy structure determines that the proportion of natural gas consumption in China is not comparable with that of foreign countries. The proportion of natural gas in primary energy consumption increased from 4% in 2010 to 8.9% in 2021, more than doubling in 10 years, and absolute consumption increased from 95.8 billion cubic meters to 372.6 billion cubic meters, an increase of nearly four times.

Prospect of natural gas development in China

At present, China has formed different types of gas reservoir characteristic development technology, according to the "discovery of a class, research a class, mature supporting a class of ideas, development technology system gradually formed.

Exploration potential analysis

For conventional gas and tight gas, the remaining resources are mainly distributed in the six fields of lithostratigraphy, Marine carbonate rocks, foreland and complex structure-lithology, and the proved rate of each field is low, and the fields of lithostratigraphy, Marine carbonate rocks and foreland are at the peak of reserve growth. At present, the evaluation of the realistic scale of eight additional storage areas, the resource potential of 30 trillion cubic meters, with 8 trillion to 10 trillion cubic meters of proven potential. The cumulative discovery rate in 2021 is 20%, which is expected to increase to 40% in 2035 and more than 50% in 2060.

Shale gas is in the early stage of exploration, with 3 additional storage areas on a realistic scale and 3 newly discovered potential additional storage areas, with a resource potential of more than 35 trillion cubic meters, and a proven geological reserve potential of 8 trillion to 9 trillion cubic meters in the future.

CBM is in the early stage of exploration, with large amount of remaining resources and unbalanced distribution. There are 2 actual additional storage areas and 3 potential additional storage areas, with proven geological reserves potential of 500 billion to 750 billion cubic meters in the future. Ordos deep coalbed methane will show a broad development prospect in the future.

Development potential analysis

Clarify the development orientation of the four types of gas reservoirs, and give precise policies to ensure the efficient development of the natural gas industry. Conventional gas is the "ballast stone" of stable production and emergency supply, is the basis of economic benefits, and needs to ensure steady development; Tight gas is the most realistic field to accelerate production, which can accelerate development and benefit development. Shale gas is an important field of production replacement, which emphasizes technical research and strives to achieve scale efficiency development. Deep coal bed gas is a new field of sustainable development, and it is implemented steadily and strives to break through the scale and efficiency.

Scenario 1: According to the economic recoverable reserves scale, storage and production ratio, stable production period, production and construction rhythm and other constraints, the use of SEC reserves of 2.03 trillion cubic meters and new economic recoverable reserves of 7.3 trillion cubic meters, is expected to reach the peak of 200 billion cubic meters in 2035, stable production until 2060.

Scenario 2: The use of SEC reserves of 2.03 trillion cubic meters and new economic recoverable reserves of 8.2 trillion cubic meters, considering the economic recoverable reserves replacement rate of more than 1 and storage and production ratio of more than 10 constraints, is expected to peak at 220 billion cubic meters in 2035, stable production until 2060. If a huge breakthrough is made in deep coalbed methane, China's oil production is expected to reach more than 240 billion cubic meters.

In the longer term, China's oil production will continue to account for 61% to 66% of the national production, according to the median 63% calculation, China's natural gas will peak in 2035 to 2040, the production scale of 317 billion to 380 billion cubic meters. Overall, peak production above 300 billion cubic meters is achievable.

Natural gas development pattern

In 2022, China will produce 220 billion cubic meters of natural gas and 84 billion cubic meters of unconventional gas, accounting for 38.2%. Natural gas business has achieved leapfrog development in recent years, and will continue to show a trend of "stable development of conventional gas and rapid development of unconventional gas" in the future. It is estimated that in 2035, China's natural gas output will be 317 billion to 380 billion cubic meters, and the output of unconventional gas will be 180 billion to 210 billion cubic meters.

To form China's first 100 billion cubic meters of natural gas super production base. In 2022, the output of Sulige gas field will reach 30.56 billion cubic meters, becoming the only super gas field with an annual output of more than 30 billion cubic meters in China and entering the ranks of the world's super large gas fields. The output of Changqing gas region will exceed 50 billion cubic meters in 2022. Ordos Basin will build China's first 100 billion cubic meters of natural gas super production base before 2030, and continue to maintain production growth.

Conventional and unconventional gas production accounts for half of the total. Conventional gas is the "ballast stone" of stable production. In 2035, the production will increase to 151.5 billion cubic meters, and maintain long-term stable production. Conventional gas fields have both stable gas supply and production regulation functions. Developed gas fields focus on the two main lines of controlling decline rate and improving recovery rate, and consolidate the stable production foundation through the measures of overall water control, reconstruction of well pattern and rolling edge expansion. New areas and new areas promote the overall construction with high quality by accelerating the evaluation and construction of new reserves.

Tight gas is the most realistic area for accelerating production. By 2035, the production will reach 80 billion cubic meters and maintain long-term stable production. The main development zone aims to improve oil recovery, and takes measures such as fine characterization of residual gas and interwell encryption. The new layer system of the new district aims to increase production, improve efficiency and reduce cost, and adopts the three-dimensional development mode of large well cluster, factory, multi-layer system and multi-well type to promote and apply new technology and accelerate the rhythm of construction and production.

Shale gas is an important area for production replacement. By 2035, the production will reach 40 billion cubic meters, and maintain long-term stable production. In Changning-Weiyuan and Zhaotong medium and deep shale gas fields, the development technology of multi-layer and multi-set well patterns has been studied and applied in order to improve oil recovery by three-dimensional development. With the goal of efficient development, deep shale gas in Luzhou and West Chongqing should upgrade the fracturing 2.0 technology with the core of "multi-cluster in the segment + large-displacement fracture creation + high-strength sand addition + temporary plugging and diversion". Meanwhile, it should strengthen evaluation, plan preparation and on-site organization guarantee, especially reduce development investment.

Deep CBM is a new area of sustainable development and will see tremendous development in the next 20 years, with an estimated production of more than 30 billion cubic meters. Judging from the current situation, the Ordos Basin will be the first to make a breakthrough. In the future, we will continue to expand the capacity construction of deep coal bed methane, strengthen technological research and reduce costs and increase efficiency, and promote the development of efficiency.