Shale gas production reduction: Where should the various stakeholders in the industry go?

INTRODUCTION: Oil and gas reform executives speculate that shale gas as a breakthrough in oil and gas reform is likely to be shut down in the future; geological prospectors speculate that China's shale gas is 25 trillion cubic meters of technically recoverable resources or doubts, gas source Whether it is sufficient or not is still a problem... And following the speculation, the capital market once again bearish on the shale gas market, which directly led some investors to shelve or even cancel the development or will be carried out. This is not an exaggeration of the shale gas investment and financing plan.

About two months ago, the United States, the birthplace of the "shale gas revolution," came to the news: "The US Energy Information Administration (EIA) has significantly reduced the recoverable reserves of Monterey shale oil technology in California, down by 96. %, the estimated reserves are only 4% of the original." The news immediately triggered a panic in the domestic oil and gas industry, and even shaken the confidence of the industry in shale gas. (The incident was referred to as "Oolong" afterwards. First, the media over-emphasized reserves, but ignored the important attribute "technical exploitability"; secondly, the Monterey production area that was reduced in reserves represents only a portion of the total US shale gas, and not all.)

At the beginning of August, more than two months later, Wu Xinxiong, director of the National Energy Administration, organized a national “13th Five-Year Plan” energy planning work conference and delivered a speech at the meeting. One of the predictions about the future development of shale gas production was once again alarming the whole industry. .

The original speech of Director Wu Xinxiong is as follows:

“Enhanced domestic oil and gas supply capacity. China's oil and gas exploration and development is in the middle and early stage, and unconventional oil and gas exploration has just started, and its development potential is huge. First, innovative exploration system and mechanism, actively promote oil and gas resources investigation and evaluation and exploration and development, and greatly improve oil and gas storage and production ratio. The second is to increase the production of onshore crude oil, consolidate old oil fields, develop new oil fields, and increase the development and utilization of low-grade resources. Third, organize the “General Assembly War” for shale gas and offshore oil and gas exploration and development, with a focus on breaking through unconventional shale gas. Oil and gas resources and offshore oil and gas exploration and development. By 2020, shale gas and coalbed methane production will reach 30 billion cubic meters respectively."

This data is far from the 2012 Energy Bureau's vision of the “Twelfth Five-Year Plan” for shale gas “60 billion to 100 billion cubic meters”.

If the "Oolong" incident of shale gas reserves in the United States brings about the "alarm bell" effect for China, then if the Secretary for Energy’s speech is a fact, it will be far from being "warning", but it’s really cheap. The industry has changed dramatically.

Afterwards, public opinion's attitude toward production cuts is mainly divided into three factions. One group is optimistic that "30 billion" should not be from the Oil and Gas Division of the Energy Bureau. The content of this speech may not necessarily become a practical policy for the future of the Energy Bureau. Is the country really The 2020 production forecast will be lowered, which will ultimately depend on the introduction of the 13th Five-Year Plan. Another group believes that the reduction in production is indicating that China is becoming more rational on the issue of shale gas. The final output of the "13th Five-Year Plan" is expected to be "30 billion cubic meters." "There will be no big difference; the last faction believes that even if the target is set at 30 billion yuan, China's shale gas industry may not be able to achieve it.

Stakeholders in all segments of the industry have also begun to seek advice from experts and officials on this matter in the near future, and have made speculations based on their own positions.

Oil and gas reform executives speculate that the passage of shale gas as a breakthrough in oil and gas reform is likely to be shut down in the future.

Geological prospectors speculate that the amount of technically recoverable resources of 25 trillion cubic meters of shale gas in China may be questionable, and whether the gas source is sufficient is still a problem.

Companies that hope to use shale gas to enter the upstream block are speculating that domestic oil and gas upstream blocks are not open.

Capital market speculation: The Energy Bureau's downward revision of shale gas production in 2020 is likely to release a negative oil and gas reform signal. The state will reduce support for the shale gas industry and reduce the total amount of shale gas projects.

Immediately after the speculation, the capital market once again bearish on the shale gas market, which directly led some investors to shelve or even cancel the shale gas investment and financing plan that has been or will be carried out. This is not an exaggeration. The smell and vigilance of the capital market is always shocking. They will not let any subtle policy changes let their money sleep.

The bearishness of the capital market is actually a big loss for China’s young shale gas industry, because just over half a year ago, due to many uncertainties in the domestic shale gas industry, including None of the investment entities, such as Jin and Magnolia, who have experience in foreign countries with rich shale gas projects, are willing to invest in domestic shale gas projects, while the power of capital has helped the United States achieve shale on the other side of the ocean. The "legend" of gas.

However, the capital market reaction may be somewhat ahead or excessive compared to the enterprises in the industrial chain, because the reporter learned that many companies are still in the consulting and speculation stage, and have not responded to this.

At present, there is still no relevant person from the Energy Bureau to further explain the "shale gas production reduction", so the "guessing" thing can be adequately stopped. After all, everything is subject to official adjustment. However, the two phenomena reflected in this matter are still worthy of careful consideration in the context of the "reform" of the Third Plenary Session of the 18th Central Committee.

First, the exploration of the potential of the industry depends to some extent on how much dividends can be released from energy reform. The term "reform dividend" was first proposed by the current Premier of the State Council Li Keqiang. Nowadays, under the background of the reforms of the Third Plenary Session of the 18th Central Committee, it is also a matter of consideration for the energy reform dividend.

Sinopec, which is the first miracle of China's first shale gas production, has set a production target of “10 billion cubic meters of shale gas production by 2017”. This is the amount of tasks that Sinopec can accomplish by drilling 500 wells in the favorable area of ​​Jiaoshiba in Sichuan before 2017, and this target is considered too conservative by some experts. Sinopec has more than 7,000 square meters of shale gas block area in the Sichuan Basin, and the Jiaoshi Dam is only one of the areas with better outgassing conditions. It covers an area of ​​more than 200 square kilometers, which is about 1% of the total area of ​​Sinopec Sichuan Basin. /35, and another Dingshan producing area that has already received a favorable gas situation has not been included in the target of 10 billion cubic meters.

Based on the premise that Sinopec can achieve the conservative production target of 10 billion cubic meters of shale gas in 2017, we make a positive assumption that if we add energy reform dividends, such as deepening mixed reforms, fully introducing private capital, opening up oil and gas upstream The opening of the pipe network has succeeded in improving transportation efficiency, energy price reform has effectively stimulated the market and other factors. The goal of 30 billion cubic meters, even the goal of 100 billion cubic meters formulated by the 12th Five-Year Plan, is possible. After all, with the United States as the mirror, the United States drilled more than 17,000 wells between 2006 and 2012, achieving a qualitative improvement in production.

On the other hand, the negative assumption is that if it is not reformed, the upstream is still limited to three main bodies of three barrels and a half oil (PetroChina, Sinopec, CNOOC, and Yanchang Petroleum). By the end of 2017, in addition to the 10 billion cubic meters of Sinopec. In addition, the other three companies have difficulty in achieving breakthroughs in production quality. Then, by 2020, the goal of achieving shale gas production of 30 billion cubic meters is indeed difficult.

Second, the relationship between planning and market is worthy of being positioned in the energy reform. Judging from the impact of the "shale gas production reduction" on the industry, the introduction of relevant policy plans of the regulatory authorities will directly constitute the decisive factor for the development of the industry. In the era of planned economy, the purpose of introducing quantitative planning is to develop production plans to produce sales. After the implementation of market economy reform in China, there are a large number of variables in the market that vary according to supply and demand. It is difficult for fixed production targets to adapt to market-oriented development. However, it must be acknowledged that energy has public and political attributes that are not available in general commodities. Full market operation may also result in uninvested investments that endanger a series of negative external influences such as national energy security.

It is imperative for the Third Plenary Session of the 18th Central Committee to adjust "energy reform" and demand that "the market must play a decisive role in resource allocation." The energy reform will also further decentralize the market, not only highlighting the role of the market, but also strengthening the model development of the government's macro-control capabilities. Therefore, in the face of the natural “home” of planning and market, what kind of system will the energy reform reform, and to what extent will we still need the country to set strict production targets for energy production in the future? Reform designers must consider.

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