(EnergyAsia, June 21 2011, Tuesday) — Royal Dutch Shell has taken a step further in plans to become a global player in developing and producing tight gas, shale gas and coal bed methane reserves.
The Anglo-Dutch major said it and China National Petroleum Company (CNPC) have signed a shareholders’ agreement to establish an equal well manufacturing joint venture to develop an innovative, highly automated Well Manufacturing System (WMS) that could significantly improve the efficiency of drilling and completing new wells onshore, particularly those containing tight gas, shale gas and coal bed methane.
Shell said full-scale commercialisation of these unconventional gases will require the drilling of hundreds of wells each year over many years. The WMS will be designed to drill and complete wells in a standardised and repeatable manner, using advanced automation techniques. The system aims to incorporate the best technology and procurement capabilities from both partners.
The joint venture intends to use state-of-the-art technologies such as automated directional drilling and drilling optimisation, including technologies pioneered by Shell in its North America tight gas operations. The WMS joint venture is expected to source the majority of its rigs, services and drilling equipment from low-cost suppliers in China.
This combination could unlock substantial natural gas resources cost-efficiently, and on a large scale.
The companies also signed a global alliance agreement to pursue mutually beneficial cooperation opportunities in China and around the world. Their respective contributions to the joint venture will be agreed during the transition phase over the coming months.
The agreements were signed in Beijing in the presence of Peter Voser, Shell’s CEO, and Jiang Jiemin, CNPC’s CEO.
Peter Voser, Shell’s CEO, said: “CNPC and Shell are collaborating in a variety of projects globally with the aim of investing for profitable growth, and to meet the world’s growing demand for cleaner, affordable energy. The shareholders agreement for the Well Manufacturing JV underscores how Shell and CNPC are working together to develop gas resources using innovative and cost competitive technologies.”