Shell and China National Petroleum Company (CNPC) signed a Global Alliance Agreement emphasizing their shared intent to pursue mutually beneficial cooperation opportunities internationally as well as in China. The two parties also signed a Shareholders 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 companies aim 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.
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.