By Sandro Serra and Francois Issard
Sandro Serra: For more than 30 years now, I have had the privilege of participating in a number of joint studies and field trips with geoscientists from Chinese oil and gas exploration companies.
Most of the studies focused on examining the hydrocarbon potential in various parts of the Tarim and Junggar Basins in western China, and involved field work, sample collection and analysis, and the interpretation of seismic and well data.
In some of the joint studies, delegations of Chinese geoscientists spent several weeks working with their US counterparts in Amoco’s main office in Houston, Texas.
My first collaboration with Chinese geoscientists was in 1982, when I led a field trip, using helicopters, in the WyomingFold and Thrust Belt for several members of the China National Oil and Gas Exploration and Development Corporation. My next opportunity to collaborate with Chinese geoscientists came in 1987. A small Amoco delegation was invited to visit parts of the Tarim and Junggar Basins. The purpose was to introduce Amoco personnel to the geology, exploration history, and hydrocarbon potential of these basins in preparation for possible foreign participation in bid rounds.
The delegation began the trip by visiting the Karamay oil field area, then traveled along the southern margin of the Junggar Basin to Urumqi, continuing to Korla and moving along the northern margin of the Tarim Basin to Kashgar, before finally ending at the Kekeya field in the southwestern corner of the basin.
Our connection with China continues to this day. While raising our daughters, my wife developed a strong interest in the history, culture, and languages of China, in part so that she could transmit this knowledge to them.
Francois Issard: For Total, and indeed for myself, the Sulige story truly started back early in 2001 when we learned of the existence of the “continuous gas accumulation” of the Ordos basin center, which had been discovered by Petro China as it drilled the Su-6 well in 2000.
The well itself started commercial production in 2006,and proved reminiscent of the descriptions of similar gas accumulations in the United States three decades earlier and later theorized in several famous AAPG lectures.
Introductory visits were then organized with the effective support of Beijing Petro-China Cooperation Administration. Technical discussions in Xi’an and geological fieldtrips followed in Inner Mongolia, Ningxia and Shaanxi, to observe the gas infrastructures and developments in the basin and relevant geological out crops on the basin fringes.
It was fascinating to observe directly at the surface the same Permian age reservoirs lying 4000 meters deeper in the basin.
Having to face the demonstration of interest of several International Oil Companies for the South Sulige block, Petro China decided in 2002 that the block (which was open for cooperation with Foreign companies)would be awarded via a competitive process, more precisely a Joint Study Agreement(JSA), through which, based on technical and experience criteria, PetroChina would select a potential partner to negotiate a Production Sharing Contract(PSC).
Total emerged as the winner of this selection stage, beating several top IOCs and consortia, and started negotiating the PSC with Petro China as soon as the outbreak of SARS was dispelled, at the end of 2003.
At that time, a partnership between an IOC and a Chinese National Oil Company was still a relatively new occurrence onshore, despite having been common for several decades offshore, and while CNPC had already ventured abroad, not so many PSCs were in place onshore with foreign companies. During PSC negotiation, there were many rounds of heated discussion and negotiation, sometimes frustrating, sometimes fruitful, but always with mutual respect for the other party. Overall, both parties had to give birth to a partnership within a very immature technical and legal environment, and I must say that seeing Petro China Changqing starting to develop these complex reservoirs at industrial scale with great optimism and high energy was very encouraging for Total while the negotiations were still going on.
(Sandro Serra was a member of Amoco and Francois Issard is managing director, Total E&P China. PetroChina Foreign Cooperation Administration Department provided this story)