In 2001, when appraisal and development work began at Daan field, the MI Energy-PetroChina partnership was faced with the commercial necessity to optimize production. Given the relatively low oil prices that prevailed then, the Daan field project was considered marginally commercial. It was imperative to define a cost-effective and technologically strong field development program. The main geologic risk factor was reservoir sandstone distribution, and a new model was constructed to predict distribution of the primary reservoir objective FuYang sandstones. Consistent with the structural evolution of the Daan area, the FuYang reservoir is focused on a series of north-northeast to northeast-trending depocenters controlled by down-to-the-northwest normal faults parallel and genetically related to the Daan fault system. The Fuyang reservoir sandstones and siltstones are interpreted to have been deposited in fluvial and marginal lacustrine environments associated with small- to medium-size lake systems, which developed in the north-northeast to northeast-trending depocenters. Based on core studies and observed modern analogs, the main FuYang reservoir facies comprised lake-delta mouth bar and fluvial channel-bar deposits.

The FuYang reservoir is best developed in the north-northeast to northeast-trending sweet spots, which correspond to the structurally controlled depocenters. Although the FuYang is also oil productive at Daan outside these sweet spot areas, well productivity is lower because of reduced reservoir sandstone development. The development plan for the Daan field called for wells to be drilled in a consistent grid pattern (175 350 m [574 1148 ft]), but the order of drilling has a significant impact on the commerciality of the project, and the reservoir distribution model is key to defining the drilling order. Appraisal wells are drilled continuously in an effort to further refine the reservoir model and identify FuYang sweet spot areas. At the same time, development well drilling proceeds in priority order, focusing first on the best quality FuYang sweet spot areas. This systematic drilling approach has lowered reservoir risk and improved early well productivity by as much as 40 to 50%, thereby significantly enhancing the project's profitability. Understanding of the FuYang reservoir distribution has also contributed to a large increase in the estimate of oil in place for the Daan field.