As its economy grows at a record pace, China will use a three-pronged approach to meeting booming demand for petroleum products.
China National Petroleum Corp. and its affiliates are charged with developing enough crude oil and natural gas supplies to keep import volumes low.
Qiu Zhong Jian, CNPC vice-president, told Oil & Gas journal in Beijing the efforts will include stepped up exploration and development efforts by CNPC in China; new offerings to attract foreign capital to China's unexplored regions; and a search by CNPC for reserves outside China.
CNPC is counting on those efforts to boost production enough in the next 5-10 years to avoid a big jump in imports.
"We hope to do it...," Qui told the journal.
Petroleum planners also want to increase natural gas use to replace oil as a transportation fuel and coal in power generation.
A third round of blocks will be offered for foreign participation in the Tarim and Junggar basins in an effort to attract capital and technology to the most difficult areas. Qiu said the "very good structures" have been found in blocks offered in the lightly explored Southeast Tarim basin in the first bidding round.
TARIM BASIN
Operating conditions are still tough in the Tarim basin, but they are improving.
A highway recently completed from the north side of the basin to the center will soon be extended across the basin. That will reduce the need for special vehicles, although seismic surveys and other operations will still require special equipment to operate in the basin's 300,000 sq km of sand.
Tarim drilling depths range from 4,000 or on the edge of the basin to 5,000 m in the center. A high pressure water zone and a steep dip angle complicate drilling operations.
Two 510-mm diameter pipelines - one oil and one gas - will be laid this year from the Tazhong No. 4 site in the center of the basin to Luen Nai field and on to the Turpan basin. From there, oil will move east by train and natural gas will be consumed locally
Construction has begun on a 457-mm diameter, 310-km gas pipeline linking Shanshan with Urumqi. Construction time is estimated at 14 months.
DOMESTIC SUPPLY EFFORTS
Qiu reemphasized that CNPC's plans for increasing domestic petroleum supplies are to stabilize production in the east while increasing exploration and development in the west.
In the east, Qiu says, plans call for exploration to bolster reserves, as well as enhanced recovery projects to at least "stabilize, maybe slightly increase" reserves. The goal is to maintain production at 125 million tons/year of oil from 1995 past 2000.
CNPC places its hope for production increases in the western part of China, where output is now about 40 million tons/year.
Although more oil than gas has been found in the huge Tarim basin, natural gas prospects there are significant, Qiu says. He cites the Tarim, Shaan Gan-Ning (Eerdous), and Sichuan basins as major gas provinces.
Sichuan basin gas has a ready market in the region. Production does not yet meet local demand, and the region has a good distribution network, Qiu says.
Eerdous basin plans involve construction of three pipelines: one to Beijing, one to Yinchuan, and one to Man, the capital of Shaanxi province.
Tarim basin gas has limited markets at present. But Qiu said exporting Tarim gas is not being considered.
CNPC has plans to build a fertilizer plant in the region to be fed by associated gas. The company also is studying how it might use condensate produced in the basin.
RESTRUCTURING, TOO
Part of China's strategy is to streamline CNPC.
It will be "difficult to progress" with the company's traditional huge, complex, organizational structure, Qiu says. CNPC's structure includes oil companies, service companies, social services, agribusiness, and other segments with a total of about 1.5 million employees.
Structural reform is under way on a field basis. Each oil field organization is divided into three major sectors:
- Exploration, drilling, and production operations.
- Services (drilling, seismic, testing, pipeline transportation) and construction.
- Social services, including hospitals and schools.
A management consultant has been studying the organization. Qiu said, "We want to learn from foreign companies about restructuring."
