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THE terrain of Dongying is relentlessly flat, and on the vast plain that surrounds it nodding pump jacks are ubiquitous. They have become a symbol of the city, hence Dongyings nickname, “City of Oil.” This place was settled by people who consider themselves “oil pioneers.” Shengli Oilfield is located here, in the Yellow River Delta of northern Shandong Province, and covers an area of over 2,500 square kilometers.

The Black Gold Rush

As chief senior expert of Shengli Oilfield, Gu Xinyi has made Dongying City his home for nearly 50 years. After graduation from college in 1956, he joined an oil-prospecting team leaving for Northwest China. In 1961 he was transferred from Gansu Provinces Yumen – the first oilfield in New China – to Shandong. “When I first came to Dongying, it was just such a wasteland – no trees or roads,” Gu recalls, “and all of our workers were living in tents. Brick houses were unknown.” At that time, if Gu took a bus from Jinan (capital of Shandong Province) to Dongying, he would have to leave after dinner one day ahead so that he could get to his destination by the following morning. As Gu tells it, “Whenever it rained, transportation would be disrupted for at least three days.” But now, its only a three-hour drive from Dongying to Jinan.

In 1961, the first gusher of “black gold” was drilled only a kilometer from Dongying, which was still a small village then. “We were so excited at that moment,” says Gu, his face still flushed with the memory. “You know, it seemed like so long that we had been exploring for oil.” With the development of an oil-based local economy, Dongying gradually evolved from a small village into an urban community, and in 1983, over 20 years after Gus team struck oil, Dong-ying City was established. “One of the reasons to formalize Dongying as a city was to better support the development of the petroleum resources,” explains Gu.

Oilfield workers also brought their kin to Dongying. “At first our family members were assigned to reclaim wasteland and grow crops. Because Dongying is located near the mouth of the Yellow River, most land here contained saline-alkali soils. They would draw water from the Yellow River to help leach salt from the earth, so crops are growing well to this day,” explains Gu. Everything about those times is still clear in his mind.

Despite the tough conditions, Gu and other workers were still full of energy and excitement. The human effort that went into the new oilfield was evident in food allowances. At that time grain was rationed; an oilfield worker was entitled to a monthly amount of 22.5 kilograms and an office worker to 14 kilograms. Gu reminisces, “All of us were very dedicated to oil exploration. Through our hard work, Shengli Oilfield, the second largest in China, was officially established by 1974.”

Dual Governance

In 2008, the taxes and profits contributed by Shengli Oilfield to the national and civic revenues were 1.72 and 50 percent respectively. “Without the Shengli Oilfield, there would be no Dongying City,” says Wang Junhua, who has been a driver here for 30 years and has witnessed the changes. “Wherever the oilfield extends, new roads and new construction follow,” he adds.

The major production area of Shengli Oilfield is located in Dongying City, lying on both sides of the Yellow River Mouth. As Wang Zenglin, chief expert of the oil-exploration project, explains it, its main working area also encompasses the nearby cities of Binzhou, Dezhou, Jinan, Zibo, and others. The total oil resources of the oilfield are calculated at 11.9 billion tons and its total known gas resources are 1.3 trillion cubic meters. To date, its proven oil reserves are 4.83 billion tons. Exploration has now been expanded beyond the Bohai Bay Basin.

As a pioneering organization and dominant player in the local economy, Shengli Oilfields management is on a par with the municipal government of Dongying, and locals describe their relationship as that of “a big enterprise and a small civic government.” There are only a few examples of such dual industrial-civic governance in the country.

The oilfield employs 198,000 people, and their family members bring the total population on the oilfield to 400,000. That represents 20 percent of Dongyings total population of just under 2 million.

Second-generation Pioneers

Wang Hongmei, in her 30s, has worked on the oilfield for more than ten years. Her father is part of the old guard, and much of Wangs childhood hours with him were spent listening to his tales about the oilfield in the old days. She remembers well, “At that time, many people were looking forward to getting work here. Oil brought prosperity to my family and changed the look of Dongying.”

In the 1990s, Shenglis crude oil output was still registering over 30 million tons per year. However, in recent years the output was damped down to around 27 million tons per year to guarantee a consistent output. “The oilfield has an accumulated crude oil production of 936 million tons, making up 20 percent of the nations total since the founding of the PRC,” says Wang Zenglin.

What the society is more concerned about now is the future of the oilfield. After all, oil is non-renewable.

The 73-year-old Gu Xinyi still wishes to see continued development of the resource. “We cant foresee what it will be like decades from now, but I am sure that Shengli Oilfield will still be a force in oil production in China even 100 years from now,” he speculates. The current oil exploration techniques limit the oil recovery rate to 28.1 percent, and more than 90 percent of the oilfields reserves have not yet been exploited. “We aim to raise the oil recovery rate to 40 percent or even higher,” says Gu.

When China Today visited, the place was on the brink of summer vacation. More than 100 students of China Petroleum University had arrived to take internships in the oilfield in a bid to gain firsthand working knowledge of the operation. “We dont need to worry about jobs after graduation because we will be employed by Shengli…. as long as we have command of what we learnt at college,” a petroleum engineering major told us.

Amidst all the talk of rich resources, Dongying City hasnt let up on the search for new fields to develop. It remains a challenge for Dongying to evolve away from that principal reliance and toward balance and diversity in its industries.

When I first came to Dongying, it was just such a wasteland – no trees or roads.

Gu Xinyi, chief senior expert of Shengli Oilfield, has witnessed the development of the oilfield and Dongying City itself.