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New technology to explore hidden reserves

By Wang Yu (China Daily)
Updated: 2008-04-07 10:58

As fresh oil and gas resources decline, extracting more from old fields is increasingly important in order to meet increased energy demands.

"For domestic oil and gas fields, the current recovery ratio is 25 percent on average. How to raise that ratio determines the production of an oil company," says Zhang Zhongjia, chairman of Tianjin Hi-Tech Enterprise Co Ltd Ltd (THT).

As output drops at old oilfields, there are normally two measures that can be taken to maintain production. One is to enhance innovation and technology know-how to find hidden reserves. The other is to discover more fields, says Han Xuegong, a retired analyst with China National Petroleum Corporation.

Zhang's company is figuring out ways to make progress with the first measure by squeezing those hidden reserves out.

Injecting nitrogen into wells is one way to raise geological pressure and hike production from existing oil and gas fields. And Zhang firmly believes it is one of the most effective and cost-efficient approaches so far.

"Among available measures injecting nitrogen to add pressure comes as an effective, cost-efficient and environmental-friendly way," says Zhang. "It's the third step to extract oil and gas after natural extraction and injecting water to increase geological pressure".

THT makes equipment for the production of nitrogen, gas compressors and drilling and production equipment. THT occupies about 90 percent of the local market for nitrogen production and nitrogen injecting equipment. China's top two oil producers and refiners, PetroChina and Sinopec, are THT's long-term clients.

The company's local sales reached 300 million yuan ($42.74 million) last year.

"Besides the domestic market, our new plan is to tap the global market this year," says Zhang.

THT, based in Binhai New Area of the coastal muncipality in Tianjin, has entered the international market by building strategic alliances with companies in the United States, Canada, Pakistan, Kazakhstan and other countries, says Zhang.

Established in 1993, THT's production costs are about 20 percent lower than its international competitors, which allows the company to enjoy a comparative cost edge despite the appreciation of Chinese currency against the greenback.

"The core components are imported. Therefore, there are no quality problems with our equipment. We are now focusing on developing more patent products with our own research and development," Zhang says.

THT also has technical teams in the US and Canada, a development center for international market in San Francisco, California, and a global operations center in Hong Kong.