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The Challenges Brought By The Shortage

of Oil And Gas In China And Their Countermeasures

Pang Xiongqi, Meng Qingyang

Zhang Jun, Natori Mariko

China University of Petroleum in Beijing

Key Laboratory For Hydrocarbon Accumulation Mechanism,

Ministry of Education, PRC

[email protected]

Tele: 86-010-89733346

Fax: 86-010-89733423

Mobile: 13701296729
mailto:[email protected]:[email protected]

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Contents

I. Forward

II. The Economy Development of China Needs a Lot of Oil

and Gas Resources

III. The Brief Introduction to Oil and Gas Production inChina and their Prediction

IV. The Brief Introduction to Oil and Gas Shortage in

China and Their Prediction

V . The Challenges Brought by the Shortage of Oil and Gas

in China and Their Countermeasures

. Conclusions

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1. Brief Introduction of China

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

Population: About 1.3 Billion Foundation: in 1949, PRC

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

Beijing, ChinaLisbon, Portugal

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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 Amount Oil= 101 billion tones Gas= 42 trillion m3Proved Oil= 23.42 billion tonesGas= 3.8695 trillion m3Proved Recoverable Oil= 6.513 billion tonesGas= 2.4646 trillion m3Left Recoverable Oil= 2.381 billion tonesGas=2.0894 trillion m3

I. Forward

Legends East area

Middle area

West area

South Chinasea area

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3. Brief Introduction to Chinas 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

Oil Production

Oil Consumption

162222 170

260

190

360

200

310

420

220

490

240

Unit: million tones

I. Forward

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3. Brief Introduction to Chinas Shortage of Gas

Comparison between Gas Production and Demand in China


I. Forward

265265 420

500 7201000 1000

14001200

1800

1200

2700

1200

3400

2000 2005 2010 2015 2020 2025 2030

Gas Production

Gas Consumption

Unit: hundred million cubic meters

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Contents

I. Forward


and Gas Resources




V . The Challenges Brought by the Shortage of Oil and Gas

in China and Their Countermeasures

. Conclusions

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02

4

6

8

10

12

14

16

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

GDP

Increase

R

ate

(%)

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

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


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

and gas resources

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The relation between oil consumption increase and yearly

economy increase in China





and gas resources

-0.5

0.0

0.5

1.0

1.5

2.0

1991 1994 1997 2000 2003

The increase of demand on oil and gas per year will

reach 0.65% with 1% increase of Chinas GDP.

oilconsumptionincreaserate

/e

conomyincreasera

te

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The oil consumption increase curve with time in China




and gas resources

The increase rate of yearly oil

consumption in recent 10 years is five times

higher than that of 10 years before .

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0

100

200

300

400

500

600

700

800

900

1000

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001

Oil

co

ns

ump

tio

n(millio

n

to

nnes

) U.K China Japan U.S.A Yearly Oil

consumption of

China has reached 3

hundred million

tones and just next

to the U.S.A

0

100

200

300

400

500

600

700

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Gas

consumption

million

tonnes

oil

equivale

nt)

U.S.A U.K China JapanYearly gas

consumption rate ofChina is increasing

fast but relatively

still little comparing

with other developed

countries




and gas resources

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

Australia uses 0.8

China 6.3US 20.5

World 81

US 1 cubic km oil / year

Australia China United States

1 kml l




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

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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

dollar

s)

The GDP growth rate will be averagely 7.5%~9% per year with personal

GDP reaching 2600~3100 dollars in the coming 10 years.



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Forecast curves on oil demand by different scholars

of China in the coming 15 years

0

50

100

150

200

250

300

350

400

450

1990 1995 2000 2005 2010 2015 2020

Yearlydemand

(milliontonnes)

Tsinghua

University

Zhang Rong

Mu Shuling

Mineral

Dept.

Average

The oil demand of China in 2020

will be todays 1.5 times and reach

4 hundred million tones



2. The oil consumption of China will keep growing

with the development of economy in the future

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0

500

1000

1500

2000

2500

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Yearly

Dema

nd

(hundred

millioncub

ic

meters)

Zhang Kang

Mu Shuling

Average



2. The oil consumption of China will keep growing with

the development of economy in the future

Forecast curves on gas demand by different scholars

of China in the coming 15 years

The gas demand of China will be todays 3.5 times

and reach 180 billion cubic meters in 2020.

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Contents

I. Forward


and Gas Resources




V . The Challenges Brought by the Shortage of Oil and Gasin China and Their Countermeasures

. Conclusions

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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 ChinaandTheir Prediction

Year

Accumulated

found

geological

reserves

108t

Accumulated

found

recoverable

reserves

108t

Yearly

increase of

recoverable

reserves

108t

Left

recoverable

reserves10

8t

Geological

reserves/production

1980 71.4922 27.3631 0.7016 18.2164 17.2

1981 73.9068 28.2873 0.9242 18.1316 18

1982 76.4557 29.2629 0.9756 18.0885 17.8

1983 82.2484 32.533 3.2701 20.3013 19.2

1984 93.2744 35.7001 3.167 22.3255 19.5

1985 116.1723 37.9323 1.9198 23.312 18.71986 125.1811 39.3364 1.4264 23.4124 18

1987 132.1743 41.0333 1.6969 23.7701 17.7

1988 137.4164 42.2109 1.1776 23.5793 17.2

1989 142.2609 41.9143 0.9992 21.9079 15.9

1990 148.6561 43.2425 1.3282 21.855 15.8

1991 154.0888 43.9483 1.1229 21.164 15.2

1992 158.9784 44.9312 0.9809 20.7273 14.6

1993 164.8273 48.0659 1.2782 22.422 15.6

1994 169.8718 49.2847 1.1512 22.18 15.2

1995 174.3001 50.9078 0.742 22.3125 15

1996 181.5766 52.6027 1.2869 22.4345 14.3

1997 190.6682 54.9943 1.8306 23.2217 14.5

1998 197.7078 57.147 1.5952 23.7692 14.8

1999 205.6493 59.3418 1.632 24.36 15.2

2000 212.8956 60.9517 1.6099 24.5153 14.9

2001 217.5896 62.0432 1.0915 23.7884 14.4

2002 225.5917 63.397 1.3538 23.8737 14.1

2003 234.2 65.1261 1.7291 23.81 14.0

Total amountoil= 101 billion tonesgas= 42 trillion cubic meters

Accumulated discovered geological reservesoil= 23.42 billion tonesgas= 3.87 trillion cubic meters

Accumulated discovered recoverable reservesoil= 6.513 billion tonesgas= 2.47 trillion cubic meters

Remaining recoverable reservesoil= 2.381 billion tonesgas=2.09 trillion cubic meters

Proved rate:

oil= 38.9%gas= 23.0%

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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


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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 2005ga

s

pro

duc

tion

(hu

ndre

d

m

illion

cu

bic

me

ters

)

East China

Middle ChinaWest ChinaChinas Sea

0

5000

10000

15000

20000

1965 1970 1975 1980 1985 1990 1995 2000 2005

oi

l

pro

duc

tion

(ten

thousan

d

tonnes)

East ChinaMiddle China

West China

Chinas Sea


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4. Forecast approach and principle on

Chinas future oil and gas production

Typical Oil Depletion Curve

Norway (North Sea)

Werner Zittel , LBST www.energiekrise.de


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Relationship among the oil and gas resources, proved and recoverable

resources, remaining recoverable resources and yearly production

Oiland

gasresources(hund

redmilliontones)

Accumulated production

Proved recoverable resources

Proved resources

Theoretical maximum resources

Yearly provedresources

Yearly

production

Exploration and development procession


4. Forecast approach and principle on Chinas future oil and gas production

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Relationship among the oil and gas resources, proved and

recoverable resources, remaining recoverable resources and yearly

production of China from 1970 to 2003


4. Forecast approach and principle on Chinas future oil and gas production

0

50

100

150

200

250

1970 1975 1980 1985 1990 1995 2000 2005

accumulated discovered

geological reservoirs

accumulated discovered

recoverable reservoirsremaining recoverable

reservoirs

Explorationfruits(108tones)

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0

50

100

150

200

250

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

2008

201

0

201

2

201

4

201

6

2018

202

0

Guo

Baoshen

Jia

Wenrui

Mu

Shuling

Shen

Pingping

Average

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

0

200

400

600

800

1000

1200

1400

1600

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

202

0

Zhou Zongying

Jia Wenrui

Mu Shuling

Wan Jiye

Zhao Fuxing

Average

Oil

Gas

Production(milliontones)

Production(hundredmillion

cubicmeters)


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0

50

100

150

200

250

300

350

400

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

yearly net increase ofrecoverable reservoirs

yearly oil production

0

20

40

60

80

100

120

140

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

gas production

yearly net increase of

recoverable reservoirs


6. Forecast on oil and gas production until 2050

Year

lyoilproduction

(milliontones)

Y

earlygasproduction

(milliontones)

III Th

B i f I t d ti d F t Oil d G P d ti

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6. Forecast on oil and gas production in China

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

in China

Oil

Gas

0

50

100

150

200

250

300

1950 1970 1990 2010 2030 2050

}

}

2005

Forecast on Chinas oil and gas production

MillionTones

Oil production

Gas production

2026

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Contents

I. Forward


and Gas Resources





. Conclusions

IV Th B i f I t d ti t Oil d G Sh t i

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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

Forecast

Production

Demand

Growth

Gb /year

0

10

20

30

40

50

}Shortfall2030



time

IV Th B i f I t d ti t Oil d G Sh t i

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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% ofTotal demand in 2004

Importation is 50% ofTotal demand in 2010

}Shortfall

Production and demand (million tones)

Time

China began to importoil in 1993



IV The Brief Introduction to Oil and Gas Shortage in

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

0

500

1000

1500

2000

1950 1960 1970 1980 1990 2000 2010 2020

Gas production

Gas demand

}shortfallegin to import gas

Production and demand (hundred million cubic meters)

2004



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Contents

I. Forward


and Gas Resources

III. The Brief Introduction to Oil and Gas Production in

China and their Prediction




. Conclusions

V The Challenges Brought by the Shortage of Oil and

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Challenge IRestrain economy development

Environment

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 2004reached 300 billion RMB. The expense on yearly importation will keep

increasing with the increase of importation and higher oil price.

Space industry

Transportation

Defense Chemical Industry

Traffic

Oil & gas

Bottleneck

V . The Challenges Brought by the Shortage of Oil and

Gas in China and Their Countermeasures

V

The Challenges Brought by the Shortage of Oil and

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0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 2000

Challenge II : Affect peoples life and environment

0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 2000

010

20

30

40

50

60

70

80

90

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 thesoil , growth of desert, and so on.

China has the largest coal production and consumption. The burning of coal gives out 85% of the countrys SO285%

of the countrys CO2

and 75% of the countrys dust. The loss cost by acid rain is 2% of the GDP in 1998. The potentialeffect of CO2 is a key factor in the energy field.

World U.S.A

China

coal

hydro

oil

gas

nuclear



V

The Challenges Brought by the Shortage of Oil and

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Challenge IIIAffect country securityGulf WarOil and gas are important strategy

resources. In modern war, the

production and procession basement of

oil and its transportation tools are themain attacking targets by enemies. The

shortage of oil will seriously threaten the

security of the country. Now the pillage

on oil and gas resources is so furious

around the world. The past Gulf War

and newly ended Iraq War are all

because of the abundance of oil

resources in the Middle-east.

Iraq War




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0

10

20

30

40

50

1930 1950 1970 1990 2010 2030 2050

2005

World oil

shortfall scenarios

Past Production of Oil

Forecast

Production

Demand

Growth

Deprivat ion, war

City design / lifestyle

Pricing / taxes

Transport

mode shifts

Efficiency

Other petroleum fuelsgas, tar-sands

Other fuels

Gb/year

no single Magic Bullet solution

probably no replacement ever for cheap plentiful oil

Urgent preparation and adjustment are vital

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




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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)




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Chinas oil and gas resources:

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

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

Oil and gas resources distribution and exploration situation in China

Measure IInnovate geological theory and fasten the development andutilization of domestic oil and gas resources



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Measure III: Increase the expenses on science and

technology and develop substitute energySubstitute energy

Coal to oilDevelop hydrogen energyEthanol gasolineDevelop biomass energyUtilizing wind and solar 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.




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Measure IV : Adopt saving measures and guarantee the

stable development

Measures to Save oil & gas

Change life styleDevelop public transportationDecrease the consumption of oil by carsImprove the efficiency of oil and gas utilizationOil 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.




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China

US

What is our purpose to take these measures?



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Contents

I. Forward


and Gas Resources

III. The Brief Introduction to Oil and Gas Production in

China and their Prediction




. Conclusions

Conclusions

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. Conclusions

1. Chinas economy is still in fast development stage,

oil and gas resources are the most important energies.

2. It is inevitable that oil and gas will be used up in thefuture, the predicted peak production of oil and gas inChina will be in 2026.

3. Chinese government now is paying much moreattention to this serious problem and four measures aretaken to solve this problem.

4. We believe that human beings can take advantage of

their talents and knowledge to solve this problem.