Shell agrees to alliance, well manufacturing JV with China National Petroleum Co.
Shell and China National Petroleum Co. (CNPC) on Monday signed a global alliance agreement to emphasize a shared intent to pursue mutually beneficial cooperation opportunities internationally as well as in China, the companies said.
The two parties also signed an agreement to establish a well manufacturing joint venture (50% CNPC and 50% Shell) subject to further corporate and government approvals.
It is intended that the joint venture will develop an innovative, highly automated well manufacturing system (WMS) that could significantly improve the efficiency of drilling and completing new wells onshore.
The details of the parties' respective contributions to the joint venture will be agreed during the transition phase over the coming months, officials said.
Peter Voser, CEO of Shell, and Jiang Jiemin, CEO of CNPC, attended the signing ceremony in Beijing.
Voser 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 agreement for the well manufacturing JV underscores how Shell and CNPC are working together to develop gas resources using innovative and cost competitive technologies."
Full-scale commercialisation of tight gas, shale gas and coal bed methane can require the drilling of hundreds of wells each year, over many years.
It is intended that 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 firms said.
The joint venture intends to use state-of-the-art technologies such as automated directional drilling and drilling optimization, 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 said.
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