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Interview

with Li Yong, Vice Director, CNPC Gas Lift

23.04.2012 / Energyboardroom

Mr. Li, can you please begin by explicating gas lift technology, and its employment by the CNPC organization?

Gas lift is an approach toward artificial lift in oil production. This is a technology with a rich international history, and CNPC has itself long employed this technique.

During the gas lift process, the associated natural gas in oil production is utilized such that the crude oil can be better boosted to the surface. This is a very economic and efficient approach toward production. To put things in a simple way, the associated natural gas is separated and re-injected underground with high pressure, helping to artificially lift the oil. In this way, oil production can be significantly increased. This technology requires a smaller amount of down-hole equipment, and less manpower.

This technology is the second-most popular approach toward oil production worldwide. To this day, in oil fields both in China and abroad, all together about 10,000 wells have utilized gas lift technology. Production via CNPC gas lift technique produces about 5 million tons of crude oil per year.

In China in the 1990s, with the emphasis on efficiency, gas lift technology was applied in scale in several oil fields including Tuha, Karamay, Tahe, Yumen, Tarim etc. At the time, in terms of service equipment and down-hole equipment, China’s designs and manufacture could not match international standards and due efforts were made to address accordingly. With 10 years of effort in R&D, however, we had made significant progress in areas of hardware, software and service capabilities.

Initially, this technology was applied in two oil domestic fields of Qiuling and Shanshan in Tuha. About 60 wells adopted the approach, and production reached approximately 60 cubic meters per day per well. Compared with rod pump production, gas lift can increase production by about 20-30 cubic meters per day per well. It has been proven that the application of gas lift in these two oil fields was very successful.

The core of the gas lift approach is design and down-hole equipment. Throughout our work as a research organization, we accumulated our experiences and we developed the correct design approach. We also developed relevant machinery tools, including gas lift valves and side-pocket mandrels. Gradually, we have come to well command the design, the tools, the production, the service, and the trouble-shooting for the entirety of gas lift-related software and hardware.

From the beginning of the century through today, our technology has been adopted by multiple foreign oil fields. We have offered our technology in foreign countries including Kazakhstan, Sudan and Iran.

How is this division, as an entity, integrated into CNPC’s corporate structure?

We initially started as a Tuha oilfield-based research institute department under CNPC. But with the development of our research capabilities, CNPC designated our organization as the company’s primary, nationwide R&D center for gas lift. This decision was based on our technical advantage and the recognition of the importance of this technology within CNPC.

You mentioned the long history of gas lift technology around the world—do you believe that CNPC brings something unique to this field?

We have some self-innovated techniques that are perhaps different from those that are employed by the renowned international oil service companies. For example: the rapid flow-back by gas lift during the application of hydraulic fracture. The core of this technology is one trip string combing the functions of gas lift and fracturing. Because fracturing itself is a very important stimulation approach, the combination with gas lift will facilitate the expedient flow-back of the fracturing fluids.

Actually, we have a registered patent even in the U.S., and we are looking to develop that country’s market—after locating strong partners.

Has this organization formed any partnerships internationally in order to advance its market share or its technology?

Currently, we promote our technology overseas under the platform of CNPC and CNODC, which is also a subsidiary of the former. But, if we secure the right partner, we are willing to promote our technology on a higher and wider scale because this is the right technique that will bring benefits to the oilfields suitable for this technique and will add values to all the partners of the whole business chain as well. For example, the approach of fracturing plus gas lift is a simple, economic, and efficient technique that may be widely applied in Southeast Asia or America.

When we spoke with Mr. Chen Weidong, the Chief Energy Economist for CNOOC, he remarked that, although China’s NOCs likely spend a greater combined amount on R&D than the IOCs, they nonetheless have not developed any innovations that lead the industry. Do you share Mr. Chen’s viewpoint? What is your understanding of the situation?

This reality does indeed exist.

However, my view differs a bit from that of Mr. Chen. Regarding investment in R&D, I believe our investment is less than that of the IOCs and international service companies. In my understanding, the IOCs and major service companies invest approximately 5-10% of revenues into R&D. For the Chinese—especially the NOCs—the aggregate proportion of investment toward R&D is likely a lower figure.

However, this problem has been identified and will be addressed. For example, we as the gas lift innovation center of CNPC have been given a lot of attention, and we enjoy the support of our headquarters. The corporation has recognized that our technology has certain features with potential wider applications and very good economic return. 30% of our revenue is spent on R&D for new products. Gas lift has been identified as one of the focuses of R&D within CNPC.

In the years to come—especially during the 12th 5-Year Plan—with the investment of CNPC and the endeavors of the gas lift center, we believe our technology will become world-leading. An experimental base will be newly established for more in-depth mechanism and application study and internal training and external technical exchanges will be conducted in highlighted manner that we believe will substantially boost our position in this regard.

Do you believe that China in general can become a global technology leader in the oil & gas industry?

In general, we believe that we still have some distance to cover to reach the technological level of the developed countries. Leading international companies generally have better experimental facilities and better manpower—but in certain fields, we can catch up quickly. For example, for gas lift oil production, our gap with international companies is not very significant. Besides gas lift, there are other CNPC technologies and research centers that are working hard to improve their competitive advantage. We have recognized the distance and we will work very hard to catch up.

What is your final message to the international readers of Oil & Gas Financial Journal?

In terms of engineering and technology, CNPC—especially its gas lift division—did not join the market early enough, but we have an established team and our experimental approaches are improving. We believe we can provide better technology as well as products for the industry. We would like to produce more oil for our customers!

We also hope that, through our service, our customers will come to better know China’s capabilities beyond simple manufacture and processing. We will provide first-class technology, products, and service as a package that will maximally add values to our clients worldwide.

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