EnergyReview.net last November reported that the Changbei development - in the northwest Ordos Basin – was likely to proceed with Shell as the operator, given Chinese government approval.
In a joint statement on Tuesday, Shell and state-owned PetroChina confirmed the project would proceed, making it Shell's first onshore upstream development in China.
Development will involve the drilling of up to 50 wells over 10 years, central processing facilities and inter-field pipelines. The companies have a 50-50 production sharing contract for the expected 20-year life of the field, which is spread across the Inner Mongolia autonomous region and Shaanxi province.
The field has estimated reserves of 50 billion cubic metres (bcm) and is expected to start delivering 1.5 bcm per year to markets in Beijing, Shandong, Hebei and Tianjin by 2007, rising to 3 bcm per year by 2008, the statement said.
A second pipeline for transporting the gas to Beijing is already under construction by PetroChina and is scheduled to go into operation by the middle of this year. The firms also awarded a four-year directional drilling contract to Halliburton Energy Services (Tianjin) Ltd.
