Comparison between domestic unconventional natural gas and imported gas in the context of low oil price

In recent years, unconventional gas has become one important portion of natural gas supply in China, so under the present low-oil-price global situation, oil and gas operators have to make a realistic choice of whether to keep on developing unconventional gas resources with low efficiency and low profit or to turn to more gas import from abroad. In view of this, based on typical dynamic and cost data from domestic unconventional gas fields, the Net Present Value (NPV) was applied to make a single-well economic evaluation of typical unconventional gas fields, and the technological and economic limit charts were made reflecting the three indexes of the investment & cumulative output per well and the internal rate of return (IRR). Then, through a comparison with the imported gas prices, the optimal development sequences under different oil price scenarios were obtained. The following findings were achieved. First, under the present level of gas price, investment and gas yield, benefits will be achieved only in the sweet point zones of tight gas fields, while lower cost and higher efficiency will be highly needed in those CBM and shale gas fields, the IRR of which is lower than the minimum acceptable rate of return (MARR). Second, if crude oil price stays at 40 USD per barrel (1 barrel equals 0.159 standard cubic metres), domestic tight sand gas should be developed primarily with the increasing imported LNG as a supplement; If the price rises to more than 50 USD per barrel, all domestic unconventional gas should be developed in the first place, and the supply balance between domestic and the imported gas will be well kept to achieve the maximum benefit. © 2016, Natural Gas Industry Journal Agency. All right reserved.