A PetroChina test oil well at a shale field in western China could finally mean a strong commercial potential for shale oil for the first time in the world’s top crude importer, according to Morgan Stanley. PetroChina achieved a daily production rate of 100 tons of oil, or 733 barrels, from the Jimsar oil field in the western Xinjiang province, which suggests that shale drilling could finally have a true commercial potential in China, Bloomberg quoted a Morgan Stanley note as saying.
“We believe the Jimsar shale oil discovery is likely to trigger China’s shale oil revolution,” Morgan Stanley analyst Andy Meng wrote in the report. The potential for more drilling would likely increase capex for shale this year and benefit onshore oilfield service companies, the investment bank said.
The shale boom in China, however, would be just a fraction of the U.S. shale revolution—Morgan Stanley expects Chinese shale oil production could be 100,000 bpd-200,000 bpd by 2025, which is nothing compared to the millions of barrels of oil pumped in the U.S. every day. According to EIA estimates, the seven key shale regions in the U.S. produced 8.117 million bpd in January, and a 62,000-bpd increase is expected for February. China’s biggest energy producers have started to tap more tight oil and gas wells recently, aiming to increase domestic oil and natural gas production at the world’s largest crude oil importer.