Top 10 News Stories in China’s Petroleum Industry in 2016

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1. **The leader* first proposed a new approach to establishing an energy cooperation community. In January 2016, during his invited visits to Saudi Arabia, Egypt, and Iran, **the leader*** first suggested that China and the Middle East should create a long-term, stable energy cooperation community. During the visit, **the leader** and Saudi Arabia’s King Salman jointly attended the inauguration ceremony for the commissioning of the Zhongsha Yanbu refinery. As early as 2013, **the leader** put forward the strategic concepts of building the \"New Silk Road Economic Belt\" and the \"21st Century Maritime Silk Road\". “Since the proposal of the “Belt and Road” initiative three years ago, Chinese oil and petrochemical enterprises have actively participated in it. Currently, the three major oil companies are involved in over 80 cooperation projects in regions along the “Belt and Road”. Their overseas production of oil and gas has exceeded 120 million tons. Among the overseas assets, oil and gas production, profits, and trade volume of China’s oil and petrochemical enterprises, over 50% originates from the Belt and Road region. Building a community of energy cooperation and a community with a shared future not only opens up new horizons and injects fresh impetus into mutually beneficial China-Arab cooperation, but also serves as a safeguard for the stable global supply of energy. 2. China’s crude oil production declined for the first time. Data from the **Statistics Bureau show that in September 2016, crude oil production by industries above a certain scale in China dropped by 9.8% on a year-on-year basis, while the decline in crude oil production during the first three quarters of that year was over 6%. With the continued low levels of international oil prices and a slowdown in the domestic economic growth, the growth rate of China’s oil and gas consumption has significantly declined. For the first time, there has been a substantial reduction in crude oil production—a phenomenon unprecedented in the history of China’s petroleum industry. The decline in oil and gas production indicates that China’s petroleum and petrochemical enterprises are actively shifting their development approaches, focusing on quality and efficiency. A new system for the efficient coordination of all elements in the industrial chain to adapt to market changes is rapidly taking shape. On the other hand, the sharp decline in exploration and development investments has also curbed the expansion of oil and gas production capacity. Statistics show that currently, the total investment by China’s three major oil companies in oil and gas exploration and development has dropped from a peak of 420 billion yuan in 2013 to 280 billion yuan in 2015. A further decline is expected in 2016. 3. The Shanghai Petroleum and Natural Gas Exchange officially commenced operations – The Shanghai Petroleum and Natural Gas Exchange, a **-level spot trading platform for oil and gas, was officially put into operation on November 26, 2016. The Shanghai Petroleum and Natural Gas Trading Center began trial operations in July 2015; it is expected that the volume of unilateral natural gas transactions there will exceed 15 billion cubic meters in 2016, accounting for 8% of the country’s total natural gas consumption. The shareholders of this trading center include 10 entities such as Xinhua News Agency, China National Petroleum Corporation, Sinopec, China National Offshore Oil Corporation, and Shenneng, with a registered capital of 1 billion yuan. As a fair, impartial, and transparent trading platform, the trading center not only enables an accurate reflection of the seasonal and regional patterns in China’s natural gas consumption, helps to determine the true market value of natural gas, resolves supply-demand imbalances, and stabilizes market supply; it also helps all parties to recognize the fact that China’s dependence on imported natural gas is continuing to rise. This facilitates China’s use of its advantages as a major natural gas consumer, thereby enhancing its influence and voice in the international market. 4. Sinopec makes significant oil and gas discovery in the Tarim Basin On August 29, 2016, Sinopec announced a major commercial discovery in the Shunbei oil field in China’s Tarim Basin, with resource reserves amounting to 1.7 billion tons, of which 1.2 billion tons are oil and 500 billion cubic meters are natural gas. The Shunbei oil field represents a significant breakthrough in oil and gas exploration by Sinopec in new areas, sectors, and reservoir types of the Tarim Basin. It is also a notable development in oil exploration in this basin over the past 10 years, holding important strategic significance for its upstream development. The Tarim Basin is China’s largest inland oil and gas basin, covering an area of 560,000 square kilometers. Sinopec holds 32 blocks in this basin, with a total area of 116,700 square kilometers, and the prospective resource volume amounts to 7.6 billion tons. The Shunbei oil field is an Ordovician carbonate rock fracture-cave type reservoir with high-quality crude oil; its average burial depth exceeds 7,300 meters, giving it the characteristics of being ultra-deep, ultra-high pressure, and ultra-high temperature. 5. CNPC officially separates its natural gas sales and pipeline operations. On November 25, 2016, CNPC launched a campaign to reform the management system for natural gas sales; this reform introduced a two-tier management structure for such operations, consisting of natural gas sales subsidiaries and regional natural gas sales subsidiaries. Among them, the Natural Gas Sales Branch is responsible for the management and operation of the company’s natural gas business ； The five regional natural gas sales subsidiaries serve as its affiliated entities, responsible for regional natural gas sales operations ； The Regional Natural Gas Branch has provincial representative offices as its dispatched agencies. Previously, the pipeline companies under CNPC were responsible both for pipeline operation and for the sales of natural gas transported through those pipelines. After separating natural gas sales from the pipeline business, a CNPC Pipeline Company was established to be responsible for the operation of all pipelines ； A natural gas sales subsidiary was established to handle the management and operation of natural gas-related activities, with the aim of separating transportation from sales operations in order to achieve the goal of \"controlling the middle stage while liberalizing the ends.\" 6. China’s seismic survey ship completed seismic exploration operations in the Arctic seas. On August 11, 2016, CNOOC issued a statement stating that its state-owned company CNOOC Offshore Services’ most advanced 12-cable seismic survey ship, the “Ocean Oil 720”, successfully completed operations in two areas of the Barents Sea in the Arctic over a period of 100 days, thereby filling the gap in China’s capability to carry out 3D seismic exploration in Arctic waters. The operational area for this project is located in the northern Barents Sea, within the Arctic Circle. With a latitude exceeding 75°, it lies more than 900 kilometers deep into the Arctic region. It is regarded by the industry as a high-risk operating zone where the latitude surpasses 70°. Currently, only a handful of geophysical companies worldwide possess the capability to conduct operations in these waters. The successful completion of this project signifies that our country now possesses the capability to carry out 3D seismic exploration operations in global waters. It also provides strong support for our country’s technical equipment to be used abroad and for participation in global oil and gas cooperation efforts. 7. Private refining companies face new opportunities for development. In the first half of 2016, China imported 186.5 million tons of crude oil, an increase of 23.15 million tons compared to the previous year ； The growth rate reached 14.2%, far higher than the average of 7.4% over the past 3 years. A key driver behind the sharp rise in crude oil imports is private refineries. **Following the gradual liberalization of crude oil import and usage rights, as well as the export rights for refined oil products, private refineries have encountered new opportunities for development, with their operating rates rising significantly. Data from the National Development and Reform Commission show that in April, private refineries processed 2.4% more crude oil on a year-on-year basis, reaching an unprecedented level of 44.75 million tons, or about 10.93 million barrels per day. The utilization rate of refining equipment across various regions has increased significantly; currently, the utilization rate of refining equipment in Shandong Province has exceeded 50%, reaching a historical high. The gradual relaxation of restrictions on crude oil imports has brought development opportunities to private refineries, but it has also led to further expansion of domestic refining capacity. 8. China sees explosive growth in refined oil exports. Data released by the General Administration of Customs shows that from January to October 2016, China’s exports of refined oil reached 38.11 million tons, a year-on-year increase of 37.4%. This figure has already exceeded the total export volume for the entire previous year. From a net import situation to a net export one, with export volumes reaching new highs, the pattern of China’s import and export trade in refined oil has undergone dramatic changes in just a few years. In 2015, China’s oil refining capacity reached 730 million tons, and it is expected to reach 800 million tons by 2020, resulting in an annual overcapacity of around 80 million tons. Domestic refining capacity is continuously increasing, while the overall demand for refined oil is slowing down; thus, exports have become an important means to balance the domestic market. At the same time, active participation in international trade competition is also an important means to assess the competitiveness of China’s refined oil industry. Industry experts predict that during the 13th Five-Year Plan period, the supply and demand imbalance in China’s refined oil market will continue to exist. 9. The oil and gas equivalent output of the Changqing Oilfield has exceeded 50 million tons for four consecutive years. On December 13, 2016, by reaching an annual output of 50 million tons of oil and gas equivalent, the Changqing Oilfield of China National Petroleum Corporation achieved a \"four-year streak\" of such high output levels. To date, the oil field has produced a total of 292.5 million tons of crude oil and 305 billion cubic meters of natural gas in its history. Meanwhile, eight entities, including the Changqing Oilfield Branch Company, received the **First Prize of the Science and Technology Progress Award** for their jointly developed achievements in “Exploration, development, and major theoretical and technological innovations for ultra-low permeability and tight oil and gas fields with a production capacity of 50 million tons”. The Changqing Oil Field, located in the Ordos Basin, is a rare oil and gas field with \"three low\" characteristics worldwide, making its development extremely difficult. This oil field has independently developed a series of theories on the formation of ultra-low permeability–tight oil and gas reservoirs, as well as key technologies for exploration and development, successfully unlocking unconventional, low-grade oil and gas resources that were previously difficult to detect and utilize in China. With international oil prices remaining low and oil and gas production generally resulting in losses, Changqing Oilfield has become a bright spot in terms of increasing oil and gas output. 10. The orderly socialization of the “three services and one industry” in petroleum and petrochemical enterprises. On June 22, 2016, the General Office of the State Council forwarded the guidelines issued by the State-owned Assets Supervision and Administration Commission and the Ministry of Finance on the separation and transfer of these services in the residential areas of state-owned enterprise employees, thereby establishing a roadmap and timeline for this pilot reform in state-owned enterprises. The Guidelines state that for social services of an industrial nature, such as those related to water, electricity, gas supply and utilities management, a market-oriented approach should be adopted, with solutions tailored to each enterprise on a case-by-case basis. There should be diverse separation methods; it can be through administrative transfer or through industrialized operations. For cases where transfer is chosen, the fee standards must be determined through negotiations, third-party evaluations, and other means to ensure transparency. It is necessary to actively encourage the involvement of external investors in finding solutions, and to revitalize and improve operations through methods such as outsourcing, divestment, joint ventures, and mixed-ownership reforms. In accordance with the requirements of the Guidelines, the socialization process of the \"three supplies and one service\" functions in petroleum and petrochemical enterprises is currently progressing in an orderly manner, with full completion expected by the end of 2018. II. Top 10 Scientific and Technological Advances of CNPC in 2016 1) Breakthroughs in theories regarding the multi-pathway hydrocarbon generation from ancient oil and gas systems have provided effective guidance for deep-sea exploration. Relying on key projects, CNPC has made original research advances in areas such as the formation mechanisms of ancient hydrocarbon source rocks at deep depths, the hydrocarbon generation potential in highly over-ripe stages, organic-inorganic combined hydrocarbon generation, and methods for determining the origin of natural gas. The main technical advancements include: ① It was proposed that ancient gas-bearing systems contain three types of generative materials: retained hydrocarbons, ancient oil reservoirs, and semi-condensed/semi-vaporized liquid hydrocarbons, thereby enhancing the role of high-overmature regions in natural gas accumulation. ②It has been found that Earth’s orbital forces, atmospheric circulation, and stratified oceanic chemical conditions control the deposition of organic-rich shales from the Proterozoic to the Lower Paleozoic; microbial types and redox conditions determine the hydrocarbon-generation potential of ancient source rocks. The occurrence of seven high-quality hydrocarbon source rock units from the Proterozoic provides a scientific basis for evaluating the resource potential of ancient oil and gas systems and predicting exploration prospects. ③The organic-inorganic composite hydrocarbon generation mechanism under high temperature and pressure conditions reveals the hydrogenation reaction mechanisms in different water-rock systems and their contribution to natural gas formation. Transition metal elements promote microbial growth and hydrocarbon generation processes, providing new pathways for the hydrocarbon generation potential of deep ancient oil and gas systems. ④It is proposed that the late generation of multi-source pyrolytic gas in ancient strata is a key factor in the large-scale accumulation of natural gas in the Lower Paleozoic; the theory of gas-rich \"multi-gold belts\" enhances the exploration potential in highly over-ripe areas, while pyrolytic gas injection and gas-washing fractionation are important mechanisms for the formation of secondary condensate gas reservoirs. This research made significant contributions to the discovery of 220 billion cubic meters of proven natural gas reserves and 203.8 billion cubic meters of contingent reserves in the Sinian-Cambrian strata of the Southwest China Oil & Gas Field. It also effectively facilitated the identification of an additional 2.19 billion tons of oil and gas geological reserves in the Tarim Basin since 2013. For the first time, three papers stemming from this research were published consecutively in Proceedings of the National Academy of Sciences of the United States of America. The findings were recognized by the Geochemical Society of America as one of the “Top 10 Most Influential Achievements”. 2) Technological breakthroughs in the development of deep carbonate gas reservoirs provide strong support for the large-scale development of the Anyue gas field. There are only a few large carbonate gas reservoirs from the Cambrian period worldwide, and there are no precedents for their development in China. Through targeted research and experimentation, core technologies for the development of large-scale carbonate gas reservoirs have been innovatively developed, enabling the efficient exploitation of the largest integrated carbonate gas reservoir in China. Key technological innovations: ① Prediction technology for deep, low-porosity carbonate rock enrichment areas; the accuracy rate for predicting areas with small-scale fractures and centimeter-scale dissolution cavities exceeds 88%. ②The dynamic prediction technology for crack-hole-type highly heterogeneous high-pressure gas reservoirs with water shows a prediction accuracy of over 90% for production performance. ③Deep heterogeneous reservoir modification technologies: independently developed degradable temporary plugging balls, fiber steering agents, steering acids, gel acids capable of withstanding temperatures up to 180 degrees Celsius, and fracturing fluids; three types of layer-wise steering technologies tailored to the characteristics of different reservoirs and well types have been created, resulting in a 100% success rate for operations and an increase in production by 1.5 to 8.6 times. ④The core technologies for the rapid production startup of high-yield sulfur-containing gas fields have, for the first time in China, enabled the standardized, modular, skid-mounted, and factory-based construction of surface facilities for large-scale sulfur-containing gas fields. The development technologies for large carbonate gas reservoirs were successfully applied to the development of the Moxi Longwangmiao Formation gas reservoir, resulting in an average daily production per well of over 1 million cubic meters. This enabled the rapid creation of a modern large-scale gas field with an annual production capacity of 11 billion cubic meters. 3) Significant breakthroughs have been achieved in the industrial testing of the fully soluble bridge plug technology for staged fracturing in horizontal wells. Bridge plugs are one of the core technologies for multi-stage volume fracturing in horizontal wells. Traditional drillable bridge plugs suffer from problems such as high drilling costs, high risks, and slow commissioning. The fourth-generation fully soluble bridge plugs have been successfully tested industrially in multiple oil and gas fields in China, with remarkable results. Main technological innovations: ① High-strength soluble material technology. The compressive strength of the soluble metal material system reaches 600 MPa; the soluble polymer sealing material system can withstand temperatures ranging from 50 to 150 degrees Celsius and pressures up to 90 MPa. ②The pre-made fragment-soluble slip ring technology ensures reliable pressure bearing by the bridge plug, as well as its self-destruction after pressing. ③The optimization technology for bionic structures and material components ensures precise control over the dissolution rate of bridge plugs. This enables controlled dissolution in different formation layers within the same well, as well as customization to meet specific fracturing requirements across various regions and oil/gas fields. This technology has the following advantages: it enables unlimited stages of fracturing, involves low risks, and its dissolution products cause no harm to the reservoir or environmental pollution ； It can dissolve quickly when encountering obstacles, reducing the total time and cost associated with fracturing operations; operational efficiency increases by 50%, while construction costs are reduced by one-third ； After large-scale production, the manufacturing cost is roughly comparable to the price of traditional bridge plugs. The first fracturing using fully soluble bridge plugs for shale gas was carried out on the Weiyuan 204H11 platform; it involved up to 25 fracture stages, with a pumping pressure of 86 MPa. The average daily gas production after fracturing reached 275,000 cubic meters. The cost of drill plugs alone was saved by nearly 10 million yuan, while operational risks were significantly reduced. This innovative achievement breaks the technological monopoly held by foreign companies. 4) The industrial application test of the PHR series of residue hydrotreating catalysts has been successful. The PHR series of residue hydrotreating catalysts independently developed by PetroChina has passed expert evaluation. It is believed that this series of catalysts outperforms imported catalysts in terms of hydrodesulfurization, hydrodenitrification, decoking, and bed pressure drop; they also exhibit excellent demetallization performance. Overall, they have reached an internationally advanced level. This technology has developed design and preparation methods for the grading of catalyst shape, pore structure, and activity. It has led to theoretical innovations regarding the “customized” characteristics of catalyst pore structures and activity distribution. Additionally, it has brought about technological innovations in core preparation techniques, such as domestically leading dual-peak pore structure alumina carriers. Furthermore, it has achieved application innovations through the independent design of catalyst grading schemes that facilitate long-term stable operation. The industrial application tests in Dalian Xitai showed that, under identical conditions regarding the volume of residue oil processed and temperature-raising operations, the cumulative amounts of sulfur, nitrogen, and carbon residue removed by the PHR series of catalysts were 2.8%, 24.7%, and 6.2% higher, respectively, than those removed by another series of imported catalysts. During the operation of the unit, the total pressure drop remained consistently 0.2–0.4 MPa lower than that observed with the imported catalysts. The successful application of the PHR series of residue hydrotreating catalysts will provide strong technical support and assurance for the processing of high-sulfur, low-quality crude oil by PetroChina. 5) The complete set of technologies for producing gasoline that meets National V standards effectively supports the improvement of gasoline quality. China National Petroleum Corporation has independently developed 9 series of catalysts for selective hydrodesulfurization of catalytic cracking gasoline, as well as 5 core technologies such as staged hydrodesulfurization and directed conversion of olefins. It has established two major technical series: selective hydrodesulfurization (DSO) and the combination of hydrodesulfurization and upgrading (M-DSO, GARDES), successfully overcoming the challenge of simultaneously achieving deep desulfurization, reduction of olefins, and maintenance of octane number in catalytic cracking gasoline – issues that have hindered the purification of gasoline. New technologies developed, such as the graded loading of catalysts and the sulfidation and passivation of catalysts during startup, have improved the desulfurization activity and selectivity of the catalysts, reduced octane number loss, extended the operating cycle of the unit, and shortened the startup time. Compared to adopting imported technology, costs are reduced by about 15%, and energy consumption is lowered by about 20%. By the end of 2016, more than 10 enterprises that utilized the aforementioned proprietary technologies had successfully begun producing National V clean gasoline, with a total production capacity of over 10 million tons per year. The overall technical and economic indicators reached international advanced levels, providing effective technical support for ensuring China’s petroleum industry could smoothly upgrade to the quality standards required by National V gasoline. 6) Significant progress has been made in the development of industrialization technologies for medical polyolefin resins as well as in their safety assessment. In July 2016, Sinopec established China’s first industrial production facility for medical polyolefin resins at Lanzhou Petrochemical. The two grades of polyolefin resins developed and produced there (LD26D and RP260) passed the evaluation by the **Drug Administration; enterprise standards for these products were subsequently issued under the names “QSY LS0196-2016” and “QSY LS0197-2016”” ； The Drug Administration issued registration numbers (Guoyao Baozi 20160379, 20160413), enabling China’s pharmaceutical resin packaging materials to break free from dependence on foreign technologies, raw materials, and evaluation standards, and thus gaining a voice in the domestic medical polyolefin industry for the first time. This technology meets the physical, chemical, and safety requirements for medical polyolefins in pharmaceutical resin packaging products ； GMP specifications have been established for the product standards of medical polyolefin raw materials, production processes, packaging, storage, and transportation, as well as their management systems. Its innovations include: ① the development of new low-temperature initiators and new regulators, as well as the establishment of reaction systems to adjust the microstructure of polyethylene molecular chains and their molecular weight distribution. ②The development of new shock absorption and high-pressure separation technologies has enabled the separation of oligomers and the stable operation of the equipment under ultra-high pressure. ③The development of composite electron-donating systems is used to coordinate the relationships among catalyst activity, hydrogen sensitivity, and molecular chain stereoregularity, in order to control the microstructure, molecular weight distribution, and leachable content of polypropylene. ④Development and application of specialty additive systems for medical polyolefin resins. Lanzhou Petrochemical’s purified medical polyolefin production line passed Corning Pharmaceutical’s audit for drug packaging material suppliers, and 3,000 tons were produced and sold on a commercial scale in 2016. 7) Significant progress has been made in the large-scale application of microseismic monitoring technology. Through years of research, CNPC has overcome technical challenges such as velocity model optimization, event identification, first-arrival detection, and real-time on-site positioning. It has developed microseismic real-time monitoring software with independent intellectual property rights, enabling integrated data collection, processing, and interpretation for both underground and surface microseismic monitoring. This technology plays an important role in guiding the economic exploitation of unconventional resources and fills a gap in China’s related capabilities. In terms of data collection, an innovative analysis method for the detectable distance of microseismic events has been developed, based on multiple attributes such as microseismic source mechanisms, signal propagation effects, and reception conditions ； In terms of processing, innovative techniques have been developed, including VSP-based velocity model optimization, joint P and S wave-based refined velocity model correction, microseismic event identification and detection using perforation signals, and microseismic location by combining P and S wave travel-time methods with multi-scale energy scanning ； In terms of interpretation, innovative techniques have been developed, including an ellipse-fitting-based method for describing the geometry of fractures, a comprehensive interpretation technique that integrates data from multiple disciplines, and a microseismic method for detecting natural faults. Since 2012, this technology has been applied in various oil and gas fields, shale gas, and coalbed methane areas. It has enabled in-well monitoring for over 300 wells belonging to nearly 20 clients, as well as surface monitoring and integrated well-surface monitoring for more than 10 wells. Microseismic monitoring of over 3,000 fracturing stages has been successfully carried out, providing valuable guidance for fracturing operations in vertical wells, cluster wells, horizontal wells, etc., and resulting in cost savings of over 300 million yuan. The GeoEast-ESP and GeoMonitor software have reached an internationally advanced level, becoming the mainstream software for microseismic monitoring in China and enhancing China National Petroleum Corporation’s technical core competitiveness. 8) Significant advancements in three-type logging evaluation techniques provide strong support for the exploration and development of unconventional oil and gas. The logging evaluation of unconventional oil and gas cannot rely on the conventional approaches and techniques used for conventional oil and gas, which poses a serious constraint on oil and gas exploration and development in these new fields. After years of research and development, CNPC has developed a logging evaluation technique based on three key factors: the quality of hydrocarbon source rocks, the quality of reservoirs, and engineering quality, and has also created corresponding logging processing and evaluation software. The main innovations include: ① The concept of the “seven property parameters” for unconventional oil and gas reservoirs was proposed for the first time, and a calculation method for these “seven property parameters” was developed. In particular, a new method for characterizing the static fragility index via logging was developed, solving the global challenge of accurately calculating the static fragility index ； The dual-molecular-layer adsorption theory for shale gas and a calculation model for the content of adsorbed gas at high pressures were proposed, effectively improving the accuracy of calculating the gas content in deep shale gas reservoirs. ②A new well logging calculation model for hydrocarbon generation efficiency was developed for the first time, resulting in a new technique for evaluating the quality of source rocks across the entire depth profile. ③A new reservoir quality evaluation technique that combines macroscopic and microscopic approaches has been developed, effectively addressing the technical challenges associated with the detailed evaluation of tight reservoirs and the prediction of their production capacity. ④A new engineering quality assessment technology centered on the compressibility index has been developed, as well as an integrated geotechnical and petroleum engineering method for \"sweet spot\" logging assessment. This technology has been applied in over 1,000 exploration and production wells for tight oil in basins such as Ordos, Songliao, and Junggar, as well as for shale gas in southern Sichuan. It has increased the accuracy of tight oil interpretation by 26%, while the accuracy of shale gas interpretation reached 94%. It has played an irreplaceable role in the discovery of unconventional oil and gas reserves and the development of production capacity in China. 9) Significant progress has been made in using the expansion tube open-hole sealing technique to address severe wellbore leaks. Severe wellbore leaks represent a global challenge that hinders drilling speed, quality, and efficiency. After years of research, CNPC has successfully developed this expansion tube open-hole sealing technique, which allows for effective sealing of complex formations and control of severe wellbore leaks without altering the existing well structure. This provides an economical and effective solution for safely reaching the target formation layers and achieving the objectives of exploration and development. The bare-eye plugging technology for expansion tubes relies on a thorough understanding of the materials used in such tubes, the connection threads, as well as the tools and processing techniques related to expansion. Through improvements in key technologies such as tube design, connections, and expansion processes, core technologies have been developed, including expansion cones that enable insertion at small diameters followed by expansion to larger diameters, as well as expansion threads with an expansion rate of over 20%. In June 2016, China conducted its first pilot test of the expansion tube open-hole sealing technology at well CH3725 in the Xinjiang oil field. An expansion tube with a diameter of 127 meters, a diameter of 203 millimeters, and a wall thickness of 10 millimeters was used to effectively seal the shale section between 285 and 398 meters; after expansion, its inner diameter reached 220 millimeters, allowing an 8-1/2 inch drill bit to continue drilling. On this basis, industrial application tests were conducted successively at Well Puxi 001-X1 in Sichuan and Chongqing, and Well Ha 31-H3 in the Liaohe Basin; these tests enabled the sealing of problematic leakage zones that could not be sealed using conventional plugging techniques, allowing drilling to reach the target strata without altering the well structure. The significant breakthrough in the bare-eye plugging technology for expansion tubes has laid a solid foundation for the development of future equal-diameter drilling technologies. 10) Major breakthroughs have been made in the technology for full-scale burst testing of natural gas pipelines. To meet China’s technical requirements for the safe operation of natural gas pipelines, PetroChina independently constructed a full-scale physical burst test facility capable of conducting tests on pipelines with a maximum diameter of 1,422 mm and a maximum pressure of 20 MPa. Three burst tests have been successfully carried out on high-grade steel natural gas pipelines with large diameters, marking the first time such tests have been conducted in Asia. Key technical breakthroughs: ① Completed simulation calculations under various experimental conditions, innovated the design and calculation of the structure and processes for the dual-tube array experimental system, and independently carried out the design, construction, and operation of the experimental facility. ②Conduct research on sensors for measuring parameters such as pipe rupture velocity and pressure relief waves, as well as the design and installation of 600 high-speed continuous data acquisition devices with synchronized data collection. ③Develop an automatic ignition device for natural gas clouds and a linear shaped charge cutter for pipeline burst initiation. ④A complete set of technologies for full-scale gas blasting tests on pipelines has been developed; relevant specifications have been formulated, and data analysis and processing techniques have been established. ⑤Using natural gas as the medium, three actual blast tests were successfully carried out on 1422 mm, X80 grade, 12 MPa straight-seam welded pipes; 1422 mm, X80 grade, 13.3 MPa spiral-welded pipes; and 1219 mm, X90 grade, 12 MPa welded pipes. The latter two tests were the first of their kind in the world. This technology fills the gap in China’s research on the full-scale fracture behavior of high-pressure, high-grade steel natural gas pipelines, as well as the environmental impacts caused by pipeline explosions, thereby eliminating the country’s complete reliance on foreign testing institutions. III. Top 10 Scientific and Technological Advances in the International Oil Industry in 2016 1) Research on the “source–channel–sink” system effectively guides oil and gas exploration in various types of sedimentary basins. The study of the “source–channel–sink” system represents a major cutting-edge scientific issue in the field of geology; it focuses on analyzing the processes and mechanisms of sedimentation throughout geological history by examining the characteristics of source areas, transport pathways, as well as the distribution, interaction, and evolution of sedimentary systems. This approach provides an important basis for predicting the locations of reservoirs, seals, and rock-type-related oil and gas deposits, thereby serving as a valuable guide for oil and gas exploration. The properties and age of the bedrock in the source area, as well as the catchment area, determine the degree of weathering of the parent rock and its capacity to supply sediments. Paleogeomorphic features and valley systems determine the direction in which sediments accumulate and their total volume of transport. Boundary faults, structural bends, and the types of transformation zones control the manner in which sediments are deposited and the patterns of sandbody distribution. This allows for the prediction of the development patterns of sedimentary systems influenced by the source area and transportation pathways, as well as the identification of the coupling relationships and dominant factors among the various elements involved in sediment transport. This system studies the source materials on the Earth’s surface and the processes of sediment accumulation as a whole, serving as an important predictive theory and methodological tool in oil and gas exploration. It has shown significant effectiveness in the research and exploration of sedimentary systems in various types of sedimentary basins around the world, as well as in the Bohai Bay Basin in China. As an important research direction in the field of geology, this system plays a significant role in improving the accuracy and efficiency of exploring lithology-stratigraphic oil and gas reservoirs. 2) Unconventional “sweet spot” prediction technologies hold the potential to significantly improve exploration efficiency. These technologies are a crucial aspect of oil and gas exploration; by enabling rapid and accurate well location, they can greatly increase the likelihood of encountering reservoirs as well as production levels, while reducing development costs. Predicted new technologies include: ① “Dessert” comprehensive recognition technology. By utilizing geophysical methods in combination with microseismic and core data, and through big data analysis, the \"sweet spots\" can be identified, thereby reducing costs effectively. ②Comprehensive method for shale resource evaluation. 3D oil and gas system simulations are used to model oil and gas generation and predict the distribution of remaining oil and gas, as well as to quantitatively evaluate important parameters such as the quality of structural traps and filling conditions, in order to determine the area of favorable zones and calculate resource volumes. ③Artificial neural network method. By applying well location coordinates, seismic, logging, reservoir and other oilfield data from known wells to the training set and generating a model according to the workflow, undrilled target areas can be objectively identified, thereby improving work efficiency and economic benefits. ④GeoSphere reservoir in-situ mapping technology. It enables comprehensive continuous imaging of formations within a 30-meter range, helps detect reservoir “sweet spots” in the space surrounding the wellbore, and optimizes the well trajectory, thereby reducing drilling risks. ⑤Nuclear Magnetic Resonance (NMR) factor analysis technique. By separating liquid hydrocarbons from kerogen using nuclear magnetic resonance logging and advanced spectral data, it is possible to identify fluid types and pore characteristics, calculate oil content, and identify “sweet spots”. This technology improves the accuracy of resource prediction, significantly enhances work efficiency, and provides important support for the exploration and deployment of oil and gas resources. 3) Breakthroughs have been achieved in the research, development, and testing of endogenic microbial oil recovery technology. This technology involves activating beneficial microorganisms in the formation by injecting nutrients, and utilizing their growth, reproduction, and metabolic activities in the oil reservoir environment to produce metabolic substances that aid in oil displacement. These substances act on the reservoir and the fluid within the oil layers, thereby increasing oil well production and crude oil recovery rates. Technological innovations and advancements: By utilizing existing production equipment and infrastructure, low concentrations of inorganic nutrients are continuously added to the injection water. This activates microorganisms within the oil reservoir, enabling them to reproduce rapidly. As a result, the oil-water interfacial tension is reduced, the direction of water flow is altered, and the swept volume is increased, thereby facilitating the recovery of remaining oil at a relatively low cost. Previously, it was applied 38 times in 35 production wells and 68 times in 30 water injection wells in North America, with a success rate of 89% and an average increase in oil production of 127%. In recent years, commercial trials in Kansas, Southern California, and Alberta have shown that the application of this technology after water flooding increases the production per well by more than 4 times; the cost of increasing crude oil production is approximately $10 per barrel, while the crude oil recovery rate improves by 9% to 12%. This technology has been successfully tested in reservoirs with formation temperatures ranging from 20 to 93 degrees Celsius, permeabilities of 10 to 1000 md, crude oil relative densities of 0.82 to 0.96, and formation water salinities of 18,000 to 140,000 ppm, including in dual-porosity media reservoirs. It features low costs and rapid results, offering an economical and effective extraction technique for old oil fields. 4) Commercial-scale application of solar energy for thermal recovery of heavy oil. Solar thermal recovery technology replaces the traditional methods that require the combustion of large amounts of natural gas; it utilizes solar energy to generate high-temperature steam, and its energy-saving and environmentally friendly characteristics align with the trends and demands of sustainable development today. The key technologies include: ① trough collector technology, a closed structure similar to a glass greenhouse, composed of glass and steel frames, with dozens of rows of lightweight trough mirrors inside. Sunlight is reflected onto the water circulation pipelines, generating steam with a dryness level of 80% suitable for thermal recovery; different amounts of steam are injected during day and night to reduce natural gas consumption. In field applications in the United States and Oman, the system achieves a production capacity of 7 megawatts; it can generate 50 tons of steam per day, with a steam pressure of 10 megapascals and a temperature of 312 degrees Celsius, and an annual operating efficiency of 98.6% ； The total cost of steam produced in million British thermal units is $4.5, which is on par with the price of steam generated by burning natural gas traditionally; steam can thus be supplied at a stable price for 30 years. ②Fully automatic robot cleaning technology. The production unit can withstand the high concentrations of dust and sandstorms typical of the Gulf region; its performance can be restored to 100% after cleaning, and 90% of the cleaning water can be reused. Currently, the world’s largest solar thermal power plant for heavy oil recovery has been built in Oman; it covers an area of nearly 3 square kilometers, has a peak output capacity of 1 gigawatt, generates 6,000 tons of steam per day, saves approximately 158 million cubic meters of gas consumption per year, and reduces carbon emissions by over 300,000 tons. 5) Significant progress has been made in new alkylation technologies. Solid acid alkylation technology and composite ionic liquid tetraalkylation technology use solid acid zeolite catalysts and ionic liquid catalysts respectively, replacing the traditional sulfuric acid and hydrofluoric acid catalysts; this eliminates the environmental pollution caused by acid oils and waste acids, as well as the safety issues resulting from waste acid leaks. The solid acid alkylation technology (AlkyClean) was developed jointly by CB&I Lummus and Albemarle Corporation. At its core lies the AlkyStarTM solid acid catalyst, which uses platinum as an active carrier to form acidic sites on an aluminum zeolite catalyst support. The world’s first 200,000-ton/year AlkyClean industrial demonstration plant has been put into operation at Shandong Huifeng Petrochemical. The alkylate produced has an octane number of around 96, with a sulfur content of less than 1 ppm. The composite ionic liquid carbon tetraalkylation technology (CILA) was independently developed by China University of Petroleum (Beijing). This technology involves the innovative design and synthesis of bimetallic composite ionic liquids that possess both high activity and high selectivity; it also includes the development of methods for monitoring catalyst activity and techniques for catalyst regeneration, as well as the creation of specialized equipment such as new type of tubular reactors and hydrocyclones. The world’s first 100,000 tons per year CILA plant was put into operation in Deyang, Shandong, producing alkylation oil with an octane number of over 97, along with a 100% olefin conversion rate. Solid acid alkylation technology and composite ionic liquid C4 alkylation technology offer novel solutions for gasoline desulfurization and overall quality improvement, thus having broad application prospects and significant promotional value. 6) Breakthrough achieved in a new low-cost process for hydrogen production from natural gas. Among various industrial methods of hydrogen production, the use of fossil fuels is the most common approach. However, the Hazer process, jointly developed by Australia’s Hazer Company and the University of Sydney, enables the production of hydrogen from natural gas and iron ore. It also yields graphite with a purity level of up to 99%, thereby significantly reducing the cost of hydrogen production. Conventional methane pyrolysis for hydrogen production involves the thermal decomposition of methane at high temperatures (above 750 degrees Celsius), resulting in high costs for hydrogen production. The Hazer process, by using iron ore as a catalyst, is capable of effectively converting natural gas and similar materials into hydrogen, and producing graphite with a purity of up to 99% through a single chemical purification step. This process has low costs, the catalyst does not require regeneration, and can be reused. The hydrogen production cost using the Hazer process is 0.5 to 0.75 dollars per kilogram, and 10 tons of hydrogen can be produced for every 1 ton of iron ore used in the catalytic reaction. Currently, the Hazer process is in the laboratory testing stage, and an industrial-scale testing facility is expected to come online in 2017, with an annual hydrogen production capacity of 30 tons. If successful, this process will effectively promote the development of the hydrogen industry and is a groundbreaking innovative technology. 7) New progress has been made in the research, development, and application of reverse time migration imaging technology. Reverse time migration (RTM) imaging technology utilizes the two-way wave equation to accurately describe the propagation of waves, and has become a key technique for imaging complex geological structures. Conventional RTM technology is constrained by the quality of the data collected; when dealing with deep imaging tasks, it suffers from issues such as low-frequency noise, limited resolution, weak amplitude in deep areas, and uneven amplitudes. As a result, it is difficult to achieve amplitude-preserving imaging, which limits the widespread application of reverse time migration in deep exploration. Numerous studies have been conducted internationally in the field of reverse time migration imaging. With the development of sophisticated anisotropic velocity modeling, RTM imaging methods for anisotropic media such as VTI, TTI, and orthogonal lattices have been developed and are widely used around the world, thereby making better use of the advantages of RTM imaging technology and more effectively improving the imaging accuracy of complex formations ； Research on least-squares reverse time migration techniques is advancing steadily; it offers better amplitude preservation and higher accuracy compared to the Krige method, the one-way wave equation approach, and conventional reverse time migration methods, as well as greater adaptability to irregular data ； Q-layer imaging based on the frequency peak shift method solves the Q-compensation problem in TTI backpropagation migration ； By combining the efficiency and flexibility of Gaussian beams with the high precision of backward-time migration, Gaussian beam backward-time migration was developed, retaining the flexibility of the Kirchhoff migration method as well as the imaging advantages of wave equation migration for steep dips. Currently, the Least Squares Reverse Time Migration (LSRTM) technique and the Q-compensated RTM technique have been tested and applied, and their excellent performance has attracted attention within the industry. With the continuous advancement of speed modeling techniques and computational methods, RTM technology will become more sophisticated, providing strong technical support for seismic interpretation and static reservoir description. 8) Breakthroughs have been achieved in real-time resistivity logging technology during drilling. This technology enables one to “see” the resistivity characteristics of the formation ahead of the bit during horizontal well drilling, which facilitates drilling at positions closer to the top of the oil and gas reservoir and reduces the risk of collapse of the overlying layers ； Select the core sampling site more accurately before drilling into the target layer ； It simultaneously detects multiple formation interfaces in front of the drill bit, reducing downtime, lowering drilling risks, and maintaining borehole integrity. Currently, prototype tools for real-time resistivity logging suitable for 12-1/4 to 14-inch boreholes have been developed internationally and are undergoing field testing. The prototype features a modular design: the multi-frequency transmitting antenna (located 1.8 meters from the drill bit) is integrated into the rotary steering system, while the electromagnetic wave resistivity measurement sensor is situated 3 meters away from the drill bit. Two to three inclined receiving antenna sections are placed at various positions along the drill string above the rotary steering unit. The measurement principle is similar to that of existing long-range azimuthal electromagnetic resistivity loggers; the properties of the formation in front of the drill bit are obtained through inversion of large amounts of measurement data. The forward penetration capability of the instrument depends on the distance between the transmitting and receiving antennas, the frequency, the resistivity of the surrounding formations, the thickness of the target layer, and the resistivity contrast between the layers in front of the drill bit. This prototype has undergone simulation tests in multi-well wells as well as field trials, with particular success recently achieved in subsea reservoir tests in the Gulf of Mexico. The extremely high resistivity of the salt layer provides an excellent testing environment for the resistivity logging tools used during drilling. These tools, operating at three different frequencies, were able to detect the interface of the salt layer located 30 meters ahead of the drill bit with precision. Test results show that the instrument can significantly improve the accuracy in detecting changes in the properties of rocks several meters in front of the drill bit, enabling rapid and accurate responses before drilling into potentially hazardous strata. 9) The “single-pass drilling” technology facilitates the cost-effective development of shale oil and gas under low oil price conditions. Under such conditions, the development of unconventional oil and gas in North America relies on further cost reduction and efficiency improvement for survival; in this regard, the widespread application of the “single-pass drilling” technology plays a crucial role. In 2015, drilling costs in major unconventional oil and gas regions in the United States decreased by 7%–22% compared to the previous year, and by 25%–30% compared to three years earlier. The length of horizontal sections drilled increased significantly, while the success rate of drilling rose markedly; consequently, costs continued to decline. “The \"one-shot drilling\" technique refers to a drilling method in which a single drill bit and a set of downhole drilling tools are used to complete the entire desired drilling depth in one go. It offers advantages such as saving time associated with drilling starts and stops, as well as reducing the amount of drill bits needed, thereby leading to cost savings and improved efficiency. Its technical core includes optimized drilling plan design, \"equal-life\" high-efficiency drill bits, screw and downhole drilling tool combinations, rotary steering systems, and high-quality drilling fluids. Technological advancements in high-tilt-rate rotary steering systems have further improved the efficiency of \"one-shot drilling\". In the development of shale oil and gas in North America, the final drilling stages of numerous horizontal wells can be completed in a single drilling run, thereby significantly improving operational efficiency and reducing costs. In 2016, in the Utica Shale region of the United States, the “one-pass drilling” technique was employed to complete the drilling of nearly 6,000 meters of wellbore in just 17.6 days. The horizontal section of this well measured 5,652.2 meters in length, setting a new record for the longest horizontal section in onshore wells in the U.S. 10) Breakthroughs have been achieved in gas storage using natural gas hydrates. Gas storage via natural gas hydrates involves the formation of ice-like solids when water and natural gas are combined under high pressure and low temperature conditions (8.27–10.34 MPa, 2–10 degrees Celsius); light hydrocarbons or other gas molecules are stored within the pores created by these hydrates. One cubic meter of hydrate can store 150–180 cubic meters of gas, enabling storage and transportation at normal pressure and temperatures ranging from -5 to -15 degrees Celsius. The current challenge in this technology is how to increase the rate of hydrate formation and boost the gas storage density. Recent studies have shown that parameters such as ultrasound, initial pressure, and moisture content can promote hydrate formation under certain conditions, while the addition of activated carbon, sodium dodecyl sulfate, and copper oxide nanoparticles can effectively improve the conversion rate of natural gas hydrates. The most significant finding was that, compared to the pure water system, the addition of graphene nanoparticles reduced the induction time for hydrate formation by 61.07% and increased the gas storage capacity by 12.9%. Japan, the United States, the United Kingdom, Norway, and other countries have increased their efforts in developing this technology. Japan already possesses the capability to produce 600 tons of natural gas hydrates per day, and it aims to make natural gas hydrates account for 8–12% of LNG shipments by 2020. The U.S. **Natural Gas Hydrate Research Center is conducting pilot studies on gas storage using surfactants, as well as exploratory research related to natural gas hydrate vehicles. Compared to LNG, the transportation cost of hydrates is reduced by 25%, the production cost by 3%, and the gasification cost by 9%. Additionally, they require lower temperatures and pressures, result in less energy loss during storage and transportation, and offer higher safety in transport. They thus possess significant advantages for the extraction and transportation of associated gases from small, scattered, or remote oil fields. (Compiled by Shihua Yuan; please indicate the source when reproducing)