the challenges brought by the shortage of oil and gas in china and their countermeasures pang...

The Challenges Brought By The Shortage

of Oil And Gas In China And Their Countermeasures

Pang Xiongqi, Meng Qingyang Pang Xiongqi, Meng Qingyang Zhang Jun, Natori Mariko Zhang Jun, Natori Mariko

China University of Petroleum in Beijing

Key Laboratory For Hydrocarbon Accumulation Mechanism, Ministry of Education, PRC

Email ： [email protected]

Tele: 86-010-89733346

Fax: 86-010-89733423

Mobile: 13701296729

mailto:[email protected]

ContentsContents I. ForwardI. Forward

II. The Economy Development of China Needs a Lot of Oil II. The Economy Development of China Needs a Lot of Oil and Gas Resources and Gas Resources

III. The Brief Introduction to Oil and Gas Production in III. The Brief Introduction to Oil and Gas Production in China and their PredictionChina and their Prediction

IV. The Brief Introduction to Oil and Gas Shortage in IV. The Brief Introduction to Oil and Gas Shortage in China and Their PredictionChina and Their Prediction

V . The Challenges Brought by the Shortage of Oil and Gas V . The Challenges Brought by the Shortage of Oil and Gas in China and Their Countermeasuresin China and Their Countermeasures

Ⅵ Ⅵ.. Conclusions Conclusions

1. Brief Introduction of China

★ ★

Location:Location: Northern Hemisphere, Asia Country land area:Country land area: 9.6 million km2

Population:Population: About 1.3 Billion Foundation:Foundation: in 1949, PRC

Nationalities:Nationalities: 56 (Mainly Han Nationality) Open door policy:Open door policy: Since 1978

Beijing, ChinaLisbon, Portugal

2. Brief Introduction to Oil and Gas Exploration in China

Oil and Gas Resources are Distributed in Four Areas: East, Middle, West and South China Sea

Brief Introduction of Oil and Gas Exploration in China (until the end of 2003) :

Total AmountTotal Amount ：： Oil= 101 billion tones ； Gas= 42 trillion m3

ProvedProved ：： Oil= 23.42 billion tones ； Gas= 3.8695 trillion m3

Proved RecoverableProved Recoverable ：： Oil= 6.513 billion tones ； Gas= 2.4646 trillion m3

Left RecoverableLeft Recoverable ：： Oil= 2.381 billion tones ； Gas=2.0894 trillion m3

I. ForwardI. Forward

②③

④

①Legends

① East area

② Middle area

③West area

④ South China sea area

3. Brief Introduction to China’s Shortage of Oil

Comparison between Oil Production and Demand in China(From China National Statistics Bureau, 2004)

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Oi l Producti onOi l Consumpti on

162

222170

260

190

360

200

310

420

220

490

240

Unit: million tones


3. Brief Introduction to China’s Shortage of Gas

Comparison between Gas Production and Demand in China(From China National Statistics Bureau, 2004)


Gas Production

Gas Consumption

Unit: hundred million cubic meters


II. The Economy Development of China Needs a Lot of Oil II. The Economy Development of China Needs a Lot of Oil and Gas Resourcesand Gas Resources





II. The Economy and Society Development of China Needs a Lot of II. The Economy and Society Development of China Needs a Lot of Oil and Gas Resources Oil and Gas Resources

The GDP increases very fast in recent 20 years in China and the average increase rate can reach 9% per year

Brief introduction to economy growth in recent 20 years in China (From China National Statistics Bureau, 2004)

1. The fast growth of economy in China consumes a lot of oil and gas resources

The relation between oil consumption increase and yearly economy increase in China

(From China National Statistics Bureau, 2004)



The increase of demand on oil and gas per year will reach 0.65% with 1% increase of China’s GDP.

oil c

onsu

mpt

ion

incr

ease

rat

e

/eco

nom

y in

crea

se r

ate

The oil consumption increase curve with time in China



The increase rate of yearly oil consumption in recent 10 years is five times

higher than that of 10 years before .

Yearly Oil consumption of

China has reached 3 hundred million

tones and just next to the U.S.A

Yearly gas consumption rate of China is increasing

fast but relatively still little comparing with

other developed countries



Million barrels per day 2004 Oil & Gas Journal July 5th 2004

Australia uses 0.8 China 6.3US 20.5World 81 US 1 cubic km oil / year

Australia China United States

1 kml l



Oil consumption of China is 7.8 ％ of the consumption all over the world, while U.S.A is 25.3%.

2. The oil consumption of China will keep growing with the development of economy in the future

Forecast on economy increase of China in the coming 10 years(Beijing Statistic information website, 2005)

0

5000

10000

15000

20000

25000

30000

35000

1975 1985 1995 2005 2015GDP(hundred million dollars)

The GDP growth rate will be averagely 7.5%~9% per year with personal GDP reaching 2600~3100 dollars in the coming 10 years.


Forecast curves on oil demand by different scholars of China in the coming 15 years

The oil demand of China in 2020 will be today’s 1.5 times and reach 4 hundred million tones



0

500

1000

1500

2000

2500

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Yearly Demand

(hundred million cubic meters)

Zhang Kang

Mu Shul i ng

Average



Forecast curves on gas demand by different scholars of China in the coming 15 years

The gas demand of China will be today’s 3.5 times and reach 180 billion cubic meters in 2020.

1. Brief Introduction to Oil and Gas Exploration in China ( until the end of 2003):

III. The Brief Introduction to Oil and Gas Production in ChinaIII. The Brief Introduction to Oil and Gas Production in China and and Their PredictionTheir Prediction

Year

Accumul atedfound

geol ogi calreserves

10（ 8t）

Accumul atedfound

recoverabl ereserves

10（ 8t）

Yearl yi ncrease ofrecoverabl e

reserves10（ 8t）

Lef trecoverabl e

reserves10（ 8t）

Geol ogi calreserves/ producti on

1980 71. 4922 27. 3631 0. 7016 18. 2164 17. 21981 73. 9068 28. 2873 0. 9242 18. 1316 181982 76. 4557 29. 2629 0. 9756 18. 0885 17. 81983 82. 2484 32. 533 3. 2701 20. 3013 19. 21984 93. 2744 35. 7001 3. 167 22. 3255 19. 51985 116. 1723 37. 9323 1. 9198 23. 312 18. 71986 125. 1811 39. 3364 1. 4264 23. 4124 181987 132. 1743 41. 0333 1. 6969 23. 7701 17. 71988 137. 4164 42. 2109 1. 1776 23. 5793 17. 21989 142. 2609 41. 9143 0. 9992 21. 9079 15. 91990 148. 6561 43. 2425 1. 3282 21. 855 15. 81991 154. 0888 43. 9483 1. 1229 21. 164 15. 21992 158. 9784 44. 9312 0. 9809 20. 7273 14. 61993 164. 8273 48. 0659 1. 2782 22. 422 15. 61994 169. 8718 49. 2847 1. 1512 22. 18 15. 21995 174. 3001 50. 9078 0. 742 22. 3125 151996 181. 5766 52. 6027 1. 2869 22. 4345 14. 31997 190. 6682 54. 9943 1. 8306 23. 2217 14. 51998 197. 7078 57. 147 1. 5952 23. 7692 14. 81999 205. 6493 59. 3418 1. 632 24. 36 15. 22000 212. 8956 60. 9517 1. 6099 24. 5153 14. 92001 217. 5896 62. 0432 1. 0915 23. 7884 14. 42002 225. 5917 63. 397 1. 3538 23. 8737 14. 12003 234. 2 65. 1261 1. 7291 23. 81 14. 0

Total amount ：oil= 101 billion tones ； gas= 42 trillion cubic metersAccumulated discovered geological reserves ：oil= 23.42 billion tones ；gas= 3.87 trillion cubic metersAccumulated discovered recoverable reserves ：oil= 6.513 billion tones ；gas= 2.47 trillion cubic meters

Remaining recoverable reserves ：oil= 2.381 billion tones ；gas=2.09 trillion cubic meters

Proved rate:

oil= 38.9% ； gas= 23.0%

0

50

100

150

200

250

300

350

1944 1954 1964 1974 1984 1994 2004

Production (hundred million cubic meters)

0

50

100

150

200

1944 1954 1964 1974 1984 1994 2004

Production (million tones)

2. Yearly production curves of oil and gas with time since 1949

oil

gas


3. Oil and gas production in different areas of China

0

50

100

150

200

250

300

1965 1970 1975 1980 1985 1990 1995 2000 2005

gas

prod

ucti

on(h

undr

edmi

llio

n cu

bic

mete

rs) East China

Middle ChinaWest ChinaChina’s Sea

0

5000

10000

15000

20000

1965 1970 1975 1980 1985 1990 1995 2000 2005

oil

prod

ucti

on(t

en t

hous

and

tonn

es)

East ChinaMiddle ChinaWest ChinaChina’s Sea


4. Forecast approach and principle on China’s future oil and gas production

Typical Oil Depletion Curve

Norway (North Sea)

Werner Zittel , LBST www.energiekrise.de


Relationship among the oil and gas resources, proved and recoverable resources, remaining recoverable resources and yearly production

Oil

and

gas

res

ourc

es (

hund

red

mil

lion

tone

s)

Accumulated production

Proved recoverable resources

Proved resources

Theoretical maximum resources

Yearly proved Yearly proved resourcesresources

Yearly Yearly productionproduction

Exploration and development procession

Remaining recoverable resources



Relationship among the oil and gas resources, proved and Relationship among the oil and gas resources, proved and recoverable resources, remaining recoverable resources and yearly recoverable resources, remaining recoverable resources and yearly

production of China from 1970 to 2003 production of China from 1970 to 2003



0

50

100

150

200

250

1970 1975 1980 1985 1990 1995 2000 2005

accumul ated di scoveredgeol ogi cal reservoi rsaccumul ated di scoveredrecoverabl e reservoi rsremai ni ng recoverabl ereservoi rs

Exp

lora

tion

frui

ts (

108 t

ones

)

0

50

100

150

200

250

GuoBaoshenJ i aWenruiMuShul i ngShenPi ngpi ngAverage

5. Forecast on China’s oil and gas production by different scholars in the coming 15 years.

0

200

400

600

800

1000

1200

1400

1600

Zhou Zongyi ng

J i a Wenrui

Mu Shul i ng

Wan J i ye

Zhao Fuxi ng

Average

Oil

Gas

Pro

du

ctio

n (

mil

lion

ton

es)

Pro

du

ctio

n (

mil

lion

ton

es)

Pro

du

ctio

n (

hu

nd

red

mil

lion

P

rod

uct

ion

(h

un

dre

d m

illi

on

cub

ic m

eter

s)cu

bic

met

ers)


0

50

100

150

200

250

300

350

400

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

yearl y net i ncrease ofrecoverabl e reservoi rsyearl y oi l producti on

0

20

40

60

80

100

120

140

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

gas product i on

year l y net i ncrease ofrecoverabl e reservoi rs


6. Forecast on oil and gas production until 2050

Yea

rly

oil p

rodu

ctio

nY

earl

y oi

l pro

duct

ion

(mil

lion

ton

es)

(mil

lion

ton

es)

Yea

rly

gas

pro

du

ctio

nY

earl

y ga

s p

rod

uct

ion

(mil

lion

ton

es)

(mil

lion

ton

es)

6. Forecast on oil and gas production in China

III. The Brief Introduction and Forecast on Oil and Gas Production III. The Brief Introduction and Forecast on Oil and Gas Production

in Chinain China

Oil

Gas

0

50

100

150

200

250

300

1950 1970 1990 2010 2030 2050

石油年产量天然气年产量

}

}

2005

Forecast on China’s oil and gas production

Mill

ion

Ton

es

Oil production

Gas production

2026

1. The shortage of oil and gas is an inevitable problem faced by human beings

By 2030, the gap is equivalent to 6,000 nuclear reactors

0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

2002

World oil shortfall scenarios

Past Production of Oil

ForecastProduction

Demand Growth

Gb /year

0

10

20

30

40

50

}Shortfall

2030

IV. The Brief Introduction to Oil and Gas Shortage in IV. The Brief Introduction to Oil and Gas Shortage in China and Their Prediction China and Their Prediction

time

2. The shortage of oil in China is shown by large importation.

0

100

200

300

400

500

1960 1970 1980 1990 2000 2010 2020

Oil production

Oil demand

Importation is 41% of Total demand in 2004

Importation is 50% of Total demand in

2010

}Shortfall

Production and demand (million tones)

Time

●

China began to import oil in 1993


2. The shortage of gas in China is shown by large importation

Gas production

Gas demand }shortfallBegin to import gas

Production and demand (hundred million cubic meters)

2004

●


Challenge I ： Restrain economy development

EnvironmentEnvironment

Oil is the blood of industry. The industry cannot develop without it. It costs us a lot of foreign exchanges to import oil. The number of 2004 reached 300 billion RMB. The expense on yearly importation will keep increasing with the increase of importation and higher oil price.

Space industrySpace industry

TransportationTransportation

DefenseDefense Chemical IndustryChemical Industry

TrafficTraffic

…… ……

Oil & gas

Bottleneck

V . The Challenges Brought by the Shortage of Oil and V . The Challenges Brought by the Shortage of Oil and Gas in China and Their CountermeasuresGas in China and Their Countermeasures

0102030405060708090

100

1970 1975 1980 1985 1990 1995 2000

Challenge IIII : Affect people’s life and environment

0102030405060708090

100

1970 1975 1980 1985 1990 1995 2000

China has a large population and is in shortage of energy. People are still using traditional methods to utilize the energy. It causes a series of environment problems: decrease of forests and plants, decline of earth and organic matters in the soil , growth of desert, and so on.

China has the largest coal production and consumption. The burning of coal gives out 85% of the country’s SO 2 ， 85% of the country’s CO2 ， and 75% of the country’s dust. The loss cost by acid rain is 2% of the GDP in 1998. The potential effect of CO2 is a key factor in the energy field.

World U.S.A

China

coal

hydro

oil

gas

nuclear


Challenge IIIIII ： Affect country security

Gulf WarGulf WarOil and gas are important strategy Oil and gas are important strategy

resources. In modern war, the resources. In modern war, the

production and procession basement of production and procession basement of

oil and its transportation tools are the oil and its transportation tools are the

main attacking targets by enemies. The main attacking targets by enemies. The

shortage of oil will seriously threaten the shortage of oil will seriously threaten the

security of the country. Now the pillage security of the country. Now the pillage

on oil and gas resources is so furious on oil and gas resources is so furious

around the world. The past Gulf War around the world. The past Gulf War

and newly ended Iraq War are all and newly ended Iraq War are all

because of the abundance of oil because of the abundance of oil

resources in the Middle-east.resources in the Middle-east.

Iraq WarIraq War


0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

0

1 0

2 0

3 0

4 0

5 0

2005

World oil shortfall scenarios

Past Production of Oil

ForecastProduction

Demand Growth

Deprivation, war

City design / lifestyle

Pricing / taxes

Transport mode shifts

Efficiency

Other petroleum fuels gas, tar-sands

Other fuels

Gb/year

• no single “Magic Bullet” solution no single “Magic Bullet” solution • probably no replacement ever for cheap plentiful oilprobably no replacement ever for cheap plentiful oil• Urgent preparation and adjustment are vitalUrgent preparation and adjustment are vital

How to deal with these challenges brought by the shortage of oil and gas ?


China adopts four measures to solve the shortage of oil and gas resources problems

0

100

200

300

400

500

600

1960 1970 1980 1990 2000 2010 2020

2005

Oil and gas production

Oil and gas demand

Develop domestic energy

Utilize overseas energy

Find substitute energy

Take saving measures

Oil and gas production and demand (million tones)


China’s oil and gas resources:China’s oil and gas resources:

Oil: Oil: 104 billion tones, 104 billion tones, proved rate:proved rate:38.9%38.9% (the world:(the world:73.0%)73.0%)

Gas: Gas: 42trillion cubic meters, 42trillion cubic meters, proved rate:proved rate:23.0%23.0% (the world: (the world: 60.5%)60.5%)

Oil and gas resources distribution and exploration situation in China

Measure I ： Innovate geological theory and fasten the development and utilization of domestic oil and gas resources


Measure IIII ： Participate international competition and broaden the benefit proportion of international oil and gas resources

The situation and fruits of China’s overseas oil and gas exploration

12

34

5

6

789

10

11

14

1213

15

16

17

18

23

20

24

22192125

1 阿曼 2 也门 3 伊朗 4 科威特 5 泰国 6 印尼 7 土库曼斯坦 8 阿塞拜疆 9 蒙古 10 苏丹 11 阿尔及利亚12 尼日利亚 13 委内瑞拉 14 秘鲁 15 加拿大 16 巴布亚新几内亚 17 哈萨克斯坦 18 缅甸 19 加蓬 20 沙特21 安哥拉 22 刚果 23 澳大利亚 24 吉尔吉斯斯坦 25 厄瓜多尔

★北京北京

12

34

5

6

789

10

11

14

1213

15

16

17

18

23

20

24

22192125

1 阿曼 2 也门 3 伊朗 4 科威特 5 泰国 6 印尼 7 土库曼斯坦 8 阿塞拜疆 9 蒙古 10 苏丹 11 阿尔及利亚12 尼日利亚 13 委内瑞拉 14 秘鲁 15 加拿大 16 巴布亚新几内亚 17 哈萨克斯坦 18 缅甸 19 加蓬 20 沙特21 安哥拉 22 刚果 23 澳大利亚 24 吉尔吉斯斯坦 25 厄瓜多尔

★北京北京

The benefit oil The benefit oil and gas resourand gas resources are totally ces are totally 19.7419.74 million t million tones, among tones, among them, PetroChhem, PetroChina ina 14.43 14.43 milliomillion tones, CNOn tones, CNOOC OC 5 5 million tmillion tones, SINOPEones, SINOPEC C 0.0.31 31 million million tones.tones.


Measure III:: Increase the expenses on science and technology and develop substitute energy

Substitute energySubstitute energy

★★Coal to oilCoal to oil

★★Develop hydrogen energyDevelop hydrogen energy

★★Ethanol gasolineEthanol gasoline

★★Develop biomass energyDevelop biomass energy

★★Utilizing wind and solar energyUtilizing wind and solar energy

★★Utilizing nuclear energyUtilizing nuclear energy

Oil and gas are non-renewable energy resources and will be used up in some day. Governments in all the countries should take measures to look for substitute energies.


Measure IV : Adopt saving measures and guarantee the stable development

Measures to Save oil & gasMeasures to Save oil & gas

★★Change life styleChange life style

★★Develop public transportationDevelop public transportation

★★Decrease the consumption of oil by carsDecrease the consumption of oil by cars

★★Improve the efficiency of oil and gas utilizationImprove the efficiency of oil and gas utilization

Oil is a high-efficiency energy and gas is a clean energy. The oil price will keep increasing, so adopting oil saving measures will be the direction we take efforts to.


China

US★

What is our purpose to take these measures?







Ⅵ Ⅵ. Conclusions. Conclusions

Thanks for your Thanks for your attentionattention

ⅥⅥ. Conclusions. Conclusions

1.1. China’s economy is still in fast development stage, oiChina’s economy is still in fast development stage, oil and gas resources are the most important energies. l and gas resources are the most important energies.

2. It is inevitable that oil and gas will be used up in the 2. It is inevitable that oil and gas will be used up in the future, the predicted peak production of oil and gas in Chifuture, the predicted peak production of oil and gas in China will be in 2026. na will be in 2026.

3. Chinese government now is paying much more atten3. Chinese government now is paying much more attention to this serious problem and four measures are taken ttion to this serious problem and four measures are taken to solve this problem.o solve this problem.

4. We believe that human beings can take advantage of 4. We believe that human beings can take advantage of their talents and knowledge to solve this problem. their talents and knowledge to solve this problem.

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