Shell Exploration China and the Chang Qing Petroleum Bureau (CQPEB) have signed a US $4m contract to drill two additional appraisal wells on the Changbei field in the Ordos Basin.
Drilling on the field is due to start at the beginning of July. Shell has committed to drilling two appraisal wells in two years, as part of the evaluation phase of the Changbei's development. In partnership with Shell, China National Petroleum Corporation affiliate CQPEB plans to drill vertical and horizontal sections on both wells to evaluate further field potential. CQPEB will provide the drilling rig and associated services. On completion of the evaluation and development stages of the project, Changbei is expected to yield 105 Bcf of gas for 20 years to northern and eastern China, when it comes onstream in 2004. The full development of the project including pipeline construction and associated power generation is expected to need about US $3 Bn in investment. 
The Changbei project is the first onshore upstream project initiated by Shell in China and also the largest project launched by PetroChina with foreign investors. It is hoped to market Changbei gas to Beijing, Tianjin, Hebei, Shandong and other east China provinces. The project will be put into operation in 2004. Upon completion, the project will annually supply 3 billion cubic meters of natural gas to eastern areas of China within 20 years. The gas field is located in the Shaanxi and Inner Mongoila provinces with proven reserves of 70 billion cubic metres. Full realisation of the project, including gas development, pipeline construction and associated power generation would need total investment approaching $3 billion. Some $27mn will initially be spent on the evaluation phase to establish commercial viability. Petrol China and Shell have already begun marketing activities. A joint pre-feasibility study for the pipeline routing is starting, and this will incorporate the results of further gas marketing activities. The gas pipeline network from the Ordos Basin will form a key part of China's long-term gas distribution plan. China is planning to build a 4,200-km gas pipeline linking major northwestern gas fields to markets in eastern provinces. 

    