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Natural Gas Industry B 5 (2018) 60e74
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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 period, the cumulative proved marine shale gas reserves in

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 vigor-
ously from zero. Up to the end of “12th Five-Year Plan”
E-mail address: wsq-618@petrochina.com.cn.
Peer review under responsibility of Sichuan Petroleum Administration.
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 devel-
opment 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 un-
certain 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/).
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 con-
siders 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 achieve-
ments 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 en-
gineering 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 re-
sources were up to 206.56
1012 m3 [11]. Thus abundant shale
gas resources laid a solid material foundation for the “shale gas
61
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 improve-
ment 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 cen-
tury. 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 pro-
duction 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 con-
ditions in the USA as well as the constant progress of the
low-cost high-efficient shale oil/gas development tech-
nologies [13], rather than the so-called industrial policy
guidance, support or stimulation highlighted by the do-
mestic opinions.
62 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 devel-
opment 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 ba-
sins. In 2014, the technically recoverable shale gas re-
sources 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 com-
panies and the duplication of advanced technologies, the
period that shale gas play can be put into scale produc-
tion 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
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.
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 stabil-
ity, 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. Ac-
cording 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 sta-
ble production growth and low cost of commercial
development. First, they focused the development on the
high-quality resources in the “core plays”. Through in-
tegrated 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 dril-
ling 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. Accord-
ing 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 Hey-
nesville shale gas play in 2015 was less than the odd-
ments 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 time-
efficiency 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
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
production was more than doubled. Third, they effec-
tively reduced the production cost by technical innova-
tion. 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 rea-
ches 11.32
108 m3.
5) When it comes to the future of shale gas, some inde-
pendent 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 pro-
duction 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.
63
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 pre-
dicted 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, well-
trained 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 pre-
liminary 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 devel-
opment 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 re-
sources in Poland predicted by Polish Geological Institute
were not up to 1/10 of EIA's prediction in 2011 [19]. Ac-
cording 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
64 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 five-
year 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 up-
surge 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 au-
thors 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 cate-
gory at the end of 2011, relevant authorities have issued some
policies successively, such as Shale Gas Development Pro-
gram, 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 pro-
vides 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 bid-
winning enterprises, and the remaining is all from oil com-
panies. However, in terms of the inputeoutput, all investments
were not recovered with shale gas production, expect for the
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
oil companies' RMB33 billion which corresponded to a cu-
mulative shale gas of 60
108 m3 [21]. Under the current
technical and market conditions, domestic shale gas exploi-
tation 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 ma-
rine 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 bid-
winning 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 in-
dustrial 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 inten-
sively, the Geological Survey of China (GSC) and some pro-
specting and oil companies actively conduct shale gas
exploitation in favorable zones of continental and marine-
econtinental 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
65
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 north-
western 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 dis-
coveries 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 cumu-
lative 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 re-
ported 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 sand-
stone (or carbonate rock) and shale are interbedded or super-
imposed 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 endow-
ment, horizontal well fracturing, and production testing per-
formance 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
66 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 com-
mercial 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 there-
after, 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 Niuti-
tang formations. In fact, such distribution was previously
confirmed in field geological surveys and hydrocarbon pro-
specting, 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 forma-
tions 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 com-
mon 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 re-
ported 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 pa-
rameters and good gas presence (Table 2), but haven't obtained
industrial shale gas flow from either vertical wells or hori-
zontal 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 com-
mercial 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); espe-
cially, 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
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74 67

Table 1
Characteristics of hot shale in marine shale gas blocks in South China.a
Block Target Thickness/m TOC Porosity Gas content/m3 t1 Quartz content
Max Avg Range Avg Range Avg Range Avg
LaifengeXianfeng WufengeLongmaxi 18e21 4.2% e 2.9e4.0% 3.4% 0.2e3.7 1.7 15.9e66.0% 39%
Baojing 8e13 4.3% 2.7% 0.5e2.8% 1.5% 0.2e4.5 2.2 55e67%b 62.5%
Baojing Niutitang 58 15.0% 7.9% e 0.6% 0.1e0.7 0.4 e 81.8%
Xiangxi Huayuan 35 4.0% e 0.2e2.6% 1.2% 0.8e2.4 e 30e56% e
Cengong 43e51 10.9% 4.7% 0.02e4.1% e 1.0e2.8 1.7 31e62% e
Fenggang 70e108 6.7% 6.7% 0.2e3.0% 1.1% 0.04e4.1 2.1 55e100%b 78%
Chengkou Shuijingtuo 40e100 30.0% 4.6% 1.0e7.0% 4.4% 1.8e8.6 4.2 24e76% 43%
ChangningeWeiyuan WufengeLongmaxi 33e50 7.3% 2.7%/4.0%c 3.4e8.2% 5.3%/5.4%c 1.7e6.5 2.9/4.1c 16.7e67.6% 33.1%/41.1%c
Fuling Jiaoshiba 38e44 6.1% 3.5% 5.0e7.8% 6.2% 4.0e7.7 6.1 31.1e56.0% 41.9%
a
This table is compiled with references [26e29] and other data.
b
Quartz þ feldspar content.
c
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 pro-
ducing 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 well-
developed 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 po-
tential 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, reser-
voir rocks, caprock and preservation conditions should be
68 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
Table 2
Shale gas content and hydraulic fracturing test results in the complex tectonic areas in South China.
Block Formation Target interval
depth/m
LaifengeXianfeng WufengeLongmaxi 900e950
Nanchuan 4370e4410
Qianjiang 2580e2620
Baojing 2700e2770
Longshan 1890e1920
Fenggang Niutitang 2645e2720
Cengong 1760e1820
Chengkou Shuijingtuo 1600e2600
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. Obvi-
ously, 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 rela-
tively stable tectonic environments. This has been demon-
strated 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 hydro-
carbon generation & expulsion pattern and conducting condi-
tions 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 tec-
tonics in South China and revealed that due to the giant
Shale core Results of hydraulic fracturing test
gas content/(m3 t1)
Max Avg
3.73 1.72 Through fracturing and micro-seismic monitoring, Well Laiye 1
produced no gas flow after well killing for five days
4.38 e Through 14-stage fracturing, Well Nanye 1HF produced low-
yield and non-industrial gas flow
4.43 1.20e2.10 Through 16-stage fracturing and micro-seismic monitoring as
well as liquid nitrogen drainage and swabbing, Well Zhaiye
1HF produced only trace gas flow
4.51 2.21 Through fracturing, Well Baoye 1 produced gas 500e1600 m3/
d, non-industrial
2.04 1.07 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
4.13 2.07 Through 2-stage fracturing, Well Yongfeng 1 produced no gas
flow
2.77 1.70 Through fracturing as well as liquid nitrogen drainage and
swabbing, Well Tianxing 1 produced only low-yield gas flow,
non-industrial
8.60 4.20 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 move-
ment, 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 superim-
position. 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. How-
ever, the trough syncline is narrow and close due to strong
deformation, and the core formation varies greatly and de-
velops 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 un-
damaged 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 struc-
tural 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
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 forma-
tion 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 varia-
tion 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 com-
mercial 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 explo-
ration 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 non-
technical challenges.
69
3.3.1. Effective exploitation coverage
In the delineated 1000e2000 km2 exploitation blocks for
bidding, there are huge ineffective areas, such as shale for-
mation 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 se-
lection 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
70 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 com-
plex geology. Due to narrow and steep syncline with dip an-
gles 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 ex-
pected 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 in-
frastructures such as pipeline networks.
The delineation of favorable areas and selection of bidding
blocks mainly depend on ground geologic data and the esti-
mation of shale gas resources [22], but the underground ge-
ology 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 (recover-
able) 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. Ac-
cording 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 geolo-
gists 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 Shi-
niulan 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. How-
ever, 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.
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 Five-
Year 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 Mar-
cellus (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 (ma-
rine, 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 large-
scale 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; Chang-
ningeWeiyuan, 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 bril-
liance 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 sili-
ceous 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 Chang-
ningeWeiyuan 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 expec-
tation of the operator. Dingshan, Nanchuan and other blocks
also encounter the challenge of deep ultra-pressure engineer-
ing 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.
72 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
4.3. Prospect of non-marine shale gas resources
There is no breakthrough in five-year exploration of con-
tinental 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 not-
optimistic 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 Five-
Year 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 con-
trary, 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 marine-
econtinental 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,
Fig. 6. Recoverable shale gas resources in China estimated by different organizations.
in order to make a realistic evaluation on the prospect of non-
marine 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 eval-
uation result. According to the latest evaluation result (2015)
of the Ministry of Land and Resources, the recoverable re-
sources 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 pre-
diction 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 devel-
oping 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
 Wang SQ / Natural Gas Industry B 5 (2018) 60e74
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 hy-
draulic 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 devel-
opment 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 demon-
stration zone has increased by nearly 35%, preliminarily real-
izing 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 effec-
tive 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 explo-
ration and accelerate sale gas prospecting”.
2) For the non-oil companies without petroleum explora-
tion 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 tec-
tonic 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 sug-
gested to waive the economic penalty on the enterprises
that fail to accomplish the bidding commitment and
investment.
73
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 devel-
opment. 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 in-
dustry 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 evalu-
ation of shale gas and the developing engineering tech-
nologies, 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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