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); especially, 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 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 Chengkou–Kaixian shale gas pipeline with a length of about 10 km and an annual gas transmission capacity of about 2 × 108 m3 is planning .
Table 2. Shale gas content and hydraulic fracturing test results in the complex tectonic areas in South China.
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 producing 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 , , , , , 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 potential is not large .
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, reservoir rocks, caprock and preservation conditions should be 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. Obviously, 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 relatively stable tectonic environments. This has been demonstrated 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 hydrocarbon generation & expulsion pattern and conducting conditions of the shale . 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  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 ). 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  made a series of researches on the tectonics in South China and revealed that due to the giant collision and extrusion during the Indosinian–Yanshan movement, the Jiangnan–Xuefeng 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 Jiangnan–Xuefeng uplift front to the Qiyueshan at the eastern margin of Sichuan Basin, the areas in the whole Wulingshan, western Hunan–Hubei and southeastern Chongqing are attributed to the intensive-strong deforming belt of constant extrusion and multistage superimposition.
Fig. 5. Section of progressive deformation structure inside the Yangtz plate (Huayingshan–Loudi) (note: slightly simplified according to Ref. ).
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. However, the trough syncline is narrow and close due to strong deformation, and the core formation varies greatly and develops multistage longitudinal deep large faults , 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 undamaged syncline area (such as Sangtuoping syncline in the southeastern Chongqing, and Anchang syncline in the northern Guizhou ), shale gas resources are definitely limited, bringing about great economic risks for shale gas exploitation. Exploration practices show that multistage multi-cycle structural 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 (10–20 m) and average gas content (1–2 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 . In addition, because of strong fold deformation and severe fault cutting as well as target formation 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 variation 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 . 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.
Problems and challenges in shale gas exploitation in complex tectonic areas
The above analysis shows that both potential and commercial 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 exploration 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.
Effective exploitation coverage
In the delineated 1000–2000 km2 exploitation blocks for bidding, there are huge ineffective areas, such as shale formation 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 selection 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.
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 . 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 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 complex geology.
Due to narrow and steep syncline with dip angles 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 expected results.
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 infrastructures such as pipeline networks.
The delineation of favorable areas and selection of bidding blocks mainly depend on ground geologic data and the estimation of shale gas resources , but the underground geology 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.
Scale of shale gas exploitation
Exploitation practices over three years show that Type I and II favorable areas generally account for 10–30% 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 (recoverable) 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 Wufeng–Longmaxi 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 × 104–3.5 × 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.
According to the shale gas industry development plan , 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, Wufeng–Longmaxi 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 geologists and Guizhou people come true” . 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 Shiniulan 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 (6–10) × 104 m3/d in one interval, and the open flow was (3–5) × 104 m3/d in two intervals, with the formation pressure of 52–66 MPa and pressure coefficient of 1.65–2.06.
However, 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. 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, so the resource scale is clear.
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 , 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.
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.
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 Marcellus (annual production of 30 × 108–1500 × 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 (marine, continental and marine–continental transitional facies) in China , but only the Wufeng–Longmaxi 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 Wufeng–Longmaxi in the Sichuan Basin. Within these areas, the range of proved shale gas plays is limited (such as Fuling Jiaoshiba, 383.54 km2; Changning–Weiyuan, 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 production decline in three years generally existed in North America, and the new wells to be drilled cannot copy the brilliance 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 (3000–4000 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 marine–continental transitional shale gas shows that marine shale areas are the most prospective. Except for Wufeng–Longmaxi, the marine hot shale in other formations should also be paid attention to, especially the Middle–Lower Ordovician Meitan/Dawan and Miaopo graptolite black shales that were deposited under the similar environment to Wufeng–Longmaxi and the Upper Permian Dalong black siliceous 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.
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 , . In Weiyuan, Fuling, and Fushun–Yongchuan blocks, the production performance of deep shale gas is obviously worse than that of shallow gas.
For example, in Fushun–Yongchuan block, where the Wufeng–Longmaxi 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 Changning–Weiyuan demonstration zone , 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 expectation of the operator.
Dingshan, Nanchuan and other blocks also encounter the challenge of deep ultra-pressure engineering 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 . In the southern Sichuan Basin, the favorable coverage of Qiongzhusi and Wufeng–Longmaxi 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.
Prospect of non-marine shale gas resources
There is no breakthrough in five-year exploration of continental and marine–continental 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. ). This causes the poor development effect in the mentioned two types of shale gas. In the first China–US cooperation shale gas project in 2012, USGS provided a lower-than-expected evaluation on the marine–continental 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).
Fig. 6. Recoverable shale gas resources in China estimated by different organizations.
This has been proved by the exploration in the “12th Five-Year Plan” period. Specifically, several continental shale gas blocks like east Liaohe and Chuanxi–Langzhong, which were incorporated into 19 key E&D blocks in the “12th Five-Year Plan”, are not found in the “13th Five-Year Plan” .
The hydrocarbon generation and expulsion assemblages in lacustrine and coal-measure formations are more favorable for oil/gas expulsion and migration , , so a higher oil/gas expelling efficiency will definitely restrict the exploration potential of the “inside-source” oil/gas (Fig. 4). On the contrary, 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 Carboniferous–Permian 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 .
Compared with the evaluation results in 2012, the continental and marine–continental 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, in order to make a realistic evaluation on the prospect of non-marine shale gas.
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 , based on a shale gas resource evaluation result.
According to the latest evaluation result (2015) of the Ministry of Land and Resources, the recoverable resources 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 prediction 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 developing 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 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 hydraulic fracturing technologies. Otherwise, no matter how much the investment is, shale gas production and commercial return will not be realized.