China's major oil fields saw little output growth in the first half of 2012, while gas production at projects in central and western China increased significantly, according to data in the China Oil, Gas and Petrochemical newsletter published Thursday by Xinhua news agency.

Natural gas output from Changqing, China's largest gas field, rose 11% year on year in H1 to 14.5 billion cubic meters, or an average 2.8 Bcf/day. Changqing is in the Ordos Basin in central China and is operated by state company China National Petroleum Corp.

Production has been growing rapidly because advances in technology have allowed CNPC to extract oil and gas from low-permeability reservoirs which were previously difficult to exploit, said Huang Xinhua, an analyst at IHS.

"They have managed to develop original discoveries as well as new finds. In the current five-year plan to 2015, CNPC's target is for output to reach 35 Bcm of gas," he added.

CNPC's total domestic gas production rose 6.5% year on year in H1 to 40.3 Bcm, driven by a 15.3% increase at its Tarim Basin fields in western Xinjiang province, which saw total output at 9.6 Bcm. However, its gas production from central Sichuan province fell 6.6% year on year to 6.7 Bcm.

In contrast, rival Sinopec's Zhongyuan division, which operates the giant Puguang gas field in Sichuan, reported a 20% year-on-year rise in gas output in H1 to 3.8 Bcm, according to the data.

Sinopec's total gas production rose 14.2% year on year during the period to 8.2 Bcm. Its New Star subsidiary, acquired in 2001, lifted output 10% to 3.8 Bcm. New Star has several fields in northern and western China.

"In future, more gas output will come from the Ordos, Tarim and Sichuan Basins," Huang said.

Offshore gas output from China National Offshore Oil Corp. and other companies saw significant growth, rising 45.3% year on year to 9.6 Bcm in H1.

Crude oil from Changqing increased by 9.4% year on year to 11 million mt in H1, or an average 443,000 b/d. CNPC has targeted total liquids output to exceed 500,000 b/d by 2015.

CNPC's domestic fields produced 61.9 million mt of crude oil in H1, up 1.9% year on year, according to the data, while Sinopec's total crude output edged up 1.2% to 21.3 million mt. Production at CNPC's Daqing, China's largest crude producing block, was flat from last year at 20 million mt, while output at Sinopec's Shengli field, China's second-largest producer, rose 1% year on year to 13.7 million mt.

Fields in CNPC's Sichuan Basin produced 4.8% more crude in H1 at 78,000 mt, while the Tuha area in eastern Xinjiang saw an increase of over 880% year on year to 775,000 mt.

Sinopec's total crude output rose 1.2% year on year to 21.4 million mt.

MAJOR ONSHORE FIELDS IN DECLINE

China's total crude oil output rose 1.6% year on year to 100.6 million mt in H1, according to the National Bureau of Statistics last month. Total gas output in China during the period rose 6.3% to 53.6 Bcm.

China's major onshore fields are in decline after decades of production and operators commonly cap output to prolong field life. Onshore crude output is likely to be flat going forward, given the lack of any recent major discoveries. "It is quite good if these fields can maintain steady production for the next five to 10 years," Huang said.

The companies drill thousands of wells every year just to maintain production at current levels. CNPC drilled over 18,000 development wells and almost 1,800 exploration wells last year at its projects. Over 4,600 development wells were drilled at Daqing.

Crude output from CNOOC and other companies fell 14.5% year on year in H1 to 17.9 million mt, the OGP data showed.

Offshore output remains curbed pending the full restart of the ConocoPhillips-operated Peng Lai 19-3 field, which the company said July 25 was producing 30,000 b/d at the end of the second quarter. Conoco management said it was seeking government approval for the final operating and development plan, but will ramp up output under an interim production resumption plan.

CEO and Chairman Ryan Lance said it will likely return to full operable capacity of between 110,000 b/d and 120,000 b/d once approvals are granted.

The field, the largest offshore China in the Bohai Bay, has been shut in since the third quarter of 2011 following seeps of oil-based drilling mud from the seabed into surrounding waters. Conoco has a 51% interest in Peng Lai, partnering CNOOC with 49%.