PetroChina's Daqing Oil Output Falls 4% as Reserves Dwindle

[Bigmack]

Source: Bloomberg

PetroChina's Daqing Oil Output Falls 4% as Reserves Dwindle
By Winnie Zhu
Jan. 3 (Bloomberg) -- PetroChina Co.'s parent said crude oil production from Daqing, the nation's biggest oilfield, fell 4 percent as reserves decline. Output dropped to 41.7 million metric tons from 43.5 million tons in 2006, parent China National Petroleum Corp. said in a statement on its Web site today. Natural gas production increased 2 percent from a year earlier to 2.55 billion cubic meters.

Output from Daqing, discovered almost half a century ago in the northeastern province of Heilongjiang, has fallen from a peak of 56 million tons in 1997. Crude output may decline by about 9 percent by 2010, PetroChina said in October.

Daqing's output may drop to 40 million tons in 2008, 38.9 million tons in 2009 and 38 million tons in 2010, Jia Dong, a chief accountant at PetroChina's exploration and production unit, said Oct. 25. Gas production from the field will almost double to 5 billion cubic meters in 2010, Jia said.

Read more: http://www.bloomberg.com/apps/news?pid=20602099&sid=a3q5ttMMHQHU&refer=energy

---

Peak oil? Nah!

The Chinese are going to want the oil that some Murikans feel is their birthright. Can't wait for the freep-types to start chanting.... "Kick their ass and take their gas!"

[Captain Angry]

1. The Chinese understand the issue well

So, they've taken their new found wealth and have been investing in African countries, hoping to get access to the oil fields as yet untapped.

Russia's demand has increased so much that they are nearly using all of the oil they produce themselves. China will do so, as will India. In fact, in a couple days, India will be having an autoshow where Tata group will introduce their people's car. (Think Volkswagon a la the Germans). Imagine a $2000 car in major production on the ruined roads of India. What will happen to oil consumption as that car takes hold?

What a mess.

We need to get off of the stuff immediately or sooner.

[rhett o rick]

2. So I hope no one thinks the Chinese will roll over and let us have all the oil in the middle east.nm

[ConcernedCanuk]

3. Doing the math . . .

.
.
.

From the posted article:

"The company has developed so-called ``well-fracturing'' technology to exploit more than 1 billion tons of oil reserves at Changyuan in Daqing, China National said in a statement yesterday."

______________________________________________________________________

So, at present they are removing less than 50 million tons a year -

at 50 million tons a year out of 1 billion tons

I think they got a few years left, no?

1,000,000,000

___50,000,000

over 20 years I figure

[GliderGuider]

4. Well, no, it doesn't work like that actually

You're calculating what is known as the R/P ratio - the ratio of reserves to production. However that assumes a constant rate of production. It's a well-known characteristic of oil fields that their production diminishes after the peak, pretty much regardless of what you do about it. That includes such enhanced oil recovery techniques as water or gas injection, maximum reservoir contact (MRC or "bottle-brush") drilling, and hydraulic fracturing. EOR techniques may slow the decline for a while, but lead to earlier exhaustion of the field (the Yibal field in Oman is the poster child for this effect). Also, not all of the oil stated as reserves can be recovered - a significant proportion, perhaps 30% or more, will stay underground.

The Chinese have been struggling with production declines at Daqing for the last 10 years. They managed to arrest the fall for a few years, but the 2006 and 2007 figures show results that are very familiar to oil geologists and to any layman following Peak Oil. The field is on the back side of the Hubbert Curve, and will continue to deplete with the rate probably accelerating as time goes on, no matter what technologies are thrown at the problem. Daqing will continue to produce oil for much longer than 20 years, but the rate will drop to a level where it makes no difference to the overall consumption picture. It's not the size of the tank, it's the size of the tap. In other words, reserves don't matter, industrial civilization needs a continuous supply - a large enough flow rate - to keep functioning.

A 4% annual decline is usually considered to be a medium rate of decline. For comparison, Cantarell's output in Mexico is falling by 15% to 20% per year. 3 of the world's 4 oil fields that produce over 1 million barrels per day are now in decline - Daqing (China), Burgan (Kuwait) and Cantarell (Mexico). The only one left producing near full bore is Saudi Arabia's Ghawar, and there is even suspicion that its output is dropping but the Saudis aren't admitting it.

Due to the size distribution of oil fields, it takes a LOT of small fields to make up for declining output from one big one. Only 1% of the world's oil fields are giants (with over 500 million barrels of oil) but they contribute 60% of the world's oil supply. If one giant depletes, we need to tap on average 100 smaller fields to replace its contribution. There just aren't many untapped fields left. The decline of the super-giants like Daqing and Cantarell is the sound of the fat lady warming up just off-stage.

[ConcernedCanuk]

9. Thanks GG - I realized it wasn't Quite as simple as I laid it out -

.
.
.

I read your post a few times - I learned something!

I appreciate(and understand!!) the info you presented

[boricua79]

5. nobody is kicking China's ass

1) they own us and our debt
2) they're army is no pushover and we can't even take care of a few hundred thousand insurgents in Iraq.
3) they have nukes and could always use those as a last resort.

There is no military option with China.

[Javaman]

6. Or would that be...wait for it...Peking oil....

:rofl: thank you thank you! I'll be here all week! remember to tip your waitress!

[ohio2007]

7. nice ,now get ready to Peking 'duck'

[slackmaster]

8. Good

Let them go after the oil in the Middle East while we develop other energy sources for ourselves.