ConocoPhillips eyes unconventional oil and gas in China

Houston-based exploration and production company ConocoPhillips is looking into unconventional oil and gas development in China.

The firm has reached an agreement with China Petrochemical Corp., known as Sinopec Group, to conduct a joint unconventional oil and gas development study in the Sichuan Basin, spokesman Daren Beaudo said Wednesday.

Details of the venture aren’t being released.

Unconventional gas refers to the production of gas and liquids recovered from shale gas and “tight” gas, which is called tight because it is difficult to get to due to the nature, or density, of the rock and sand surrounding the deposit. Hydraulic fracturing and horizontal drilling have been used in the United States to tap these  resources. Unconventional oil refers to tight oil plays.

Conventional plays are generally easier to produce. Examples of such rock formations are sandstones and limestone. Traditional vertical wells are often sufficient to access resources in those formations.

By contrast, in horizontal drilling, a well is drilled vertically to a certain depth, then turned sideways to reach out hundreds to thousands of feet laterally to obtain hard to reach deposits.

Major oil and gas companies are expanding their efforts of late in unconventional oil and gas, especially in China.

Royal Dutch Shell, for instance, is partnering with PetroChina to drill natural gas shale and other tight rock formations in China, with plans to spend more than $500 million this year. Shell executives have estimated that as more natural gas reserves are tapped in the country, demand to use it will grow. Shell has said it expects to drill close to 20 appraisal and exploration wells in China this year.

ConocoPhillips is no stranger to China, either. It is operator of oil fields in Bohai Bay, in the northeastern part of the country. Production was curtailed there in 2011 following two spills that released oil and drilling mud into the bay.