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China Peak Oil: 2015 Is the Year

General discussions of the systemic, societal and civilisational effects of depletion.

China Peak Oil: 2015 Is the Year

Unread postby Pops » Tue 07 Jul 2015, 18:15:00

Intense focus on the North American shale boom, Saudi Arabia, and ISIS obscures an important emerging energy trend: China’s oil production is peaking. This has profound implications for the world oil market, because China is not just a massive importer of crude; it is also among the world’s five largest oil producers, trailing only the U.S., Russia, and Saudi Arabia, and virtually neck-in-neck with Canada.

China’s oil industry has delivered impressive oil and gas production growth over the past decade. Yet a range of data and historical analogies increasingly suggest that, at global oil prices between $50-to-$100 per barrel, China’s oil supply capability is plateauing and may peak as soon as this year. Lower or higher prices would accelerate or extend this timing.

China’s crude oil output has stagnated for the past two years despite intense drilling activity on land and offshore. In late 2014, CNPC essentially threw in the towel on its workhorse field, Daqing, announcing that it would allow the field to essentially enter a phase of managed decline over the next five years. Under this new approach, the field’s oil production will fall from 800,000 barrels per day (kbd) in 2014 to 640 kbd by 2020: a 20 percent decrease. To highlight the importance of PetroChina’s decision, consider that Daqing currently accounts for approximately one in every five barrels of oil currently pumped in China – on par with the role Alaska’s massive Prudhoe Bay field has played in U.S. oil production.

While Daqing’s output has thus far declined less steeply than Prudhoe Bay’s, the Prudhoe experience shows that for even a massive field, once the steep stage of the terminal decline output phase begins, there is generally no turning back (Exhibit 1).


Image
http://thediplomat.com/2015/07/china-pe ... -the-year/
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Re: China Peak Oil: 2015 Is the Year

Unread postby Subjectivist » Tue 07 Jul 2015, 20:40:00

Pops wrote:
Intense focus on the North American shale boom, Saudi Arabia, and ISIS obscures an important emerging energy trend: China’s oil production is peaking. This has profound implications for the world oil market, because China is not just a massive importer of crude; it is also among the world’s five largest oil producers, trailing only the U.S., Russia, and Saudi Arabia, and virtually neck-in-neck with Canada.

China’s oil industry has delivered impressive oil and gas production growth over the past decade. Yet a range of data and historical analogies increasingly suggest that, at global oil prices between $50-to-$100 per barrel, China’s oil supply capability is plateauing and may peak as soon as this year. Lower or higher prices would accelerate or extend this timing.

China’s crude oil output has stagnated for the past two years despite intense drilling activity on land and offshore. In late 2014, CNPC essentially threw in the towel on its workhorse field, Daqing, announcing that it would allow the field to essentially enter a phase of managed decline over the next five years. Under this new approach, the field’s oil production will fall from 800,000 barrels per day (kbd) in 2014 to 640 kbd by 2020: a 20 percent decrease. To highlight the importance of PetroChina’s decision, consider that Daqing currently accounts for approximately one in every five barrels of oil currently pumped in China – on par with the role Alaska’s massive Prudhoe Bay field has played in U.S. oil production.

While Daqing’s output has thus far declined less steeply than Prudhoe Bay’s, the Prudhoe experience shows that for even a massive field, once the steep stage of the terminal decline output phase begins, there is generally no turning back (Exhibit 1).

http://thediplomat.com/2015/07/china-pe ... -the-year/


It seems to me that back about 7 years ago China went from being an oil exporter to oil importer.
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Re: China Peak Oil: 2015 Is the Year

Unread postby spot5050 » Wed 08 Jul 2015, 00:07:57

pops you predict peak oil every year. Don't worry. You will be proved correct one day. Peak oil will happen.

Here's a though: we are "hydrocarbon man".

Humans: Stone Age man, then Iron Age man then, something-or-other man..... then us: hydrocarbon man. 1000 years of hydrocarbon usage, coal, oil gas, then poof.. all gone.
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Re: China Peak Oil: 2015 Is the Year

Unread postby Tanada » Wed 08 Jul 2015, 08:01:27

In 1973, as production increased, China began exporting crude oil to Japan, and began offshore exploration. Exports increased to 20 million tons in 1985, before internal consumption began increasing faster than production. By 1993, internal demand for oil exceeded domestic production, and China became a net oil importer.


I remembered talking about this way back in the early days of the board when we were discussing what countries had already peaked vs what countries had become net importers of petroleum. When a net importer goes through peak their imports must grow to fill the gap, or their consumption must go down.

China was not an early oil producer and has presumably used the most advanced techniques available because oil is extracted by the national oil company and China has been swimming in cash for quite some time. If they can find some shale worth fracking they will frack it. Baring an imitation of the USA fracking boom China will become a larger importer even more rapidly from peak domestic production onward into the future.
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Re: China Peak Oil: 2015 Is the Year

Unread postby ROCKMAN » Wed 08 Jul 2015, 08:14:46

"China’s crude oil output has stagnated for the past two years despite intense drilling activity on land and offshore." As of just yesterday Reuters would disagree. From http://www.reuters.com/article/2015/07/ ... 4G20150707

China's crude oil output looks set to rise this year from a record in 2014 as new production from third largest producer CNOOC helps to counter reductions from its two bigger rivals.Output growth from China would add to a global glut even as exporters such as OPEC and Russia produce at near record highs and U.S. shale producers keep ramping up output.

With the global oversupply as much as 2.6 million barrels per day (bpd), international crude prices have been nearly cut in half over the past year.
While there is no official Chinese production outlook, information from the biggest state oil companies indicates the nation's output will rise slightly in 2015, largely due to increased production from CNOOC Ltd, the listed unit of state-owned China National Offshore Oil Corporation.

"What we have spent in the last few years has laid the foundation for the production growth this year," said an employee with CNOOC's investor relations department who asked to remain unnamed. CNOOC spent $17 billion on capital expenditures in 2014. Despite recent cost cuts, CNOOC has said it has already added at least 40,000 bpd of crude output this year. And it aims to increase daily domestic oil and gas output in China by at least 135,000 barrels of oil equivalent by the end of 2015, according the company's 2015 outlook.

China, the world's fourth biggest oil producer, raised its output in the first five months of this year by 1.8 percent from a year ago to 4.25 million bpd, compared with growth of just 0.1 percent over the same period in 2014. In 2014, China produced an annual record 4.2 million bpd. "I think Chinese crude output is going to maintain its current levels ... and go higher before the end of the year," said the director of global research for Standard Chartered. The bank expects China's production to rise 1.6 percent this year, although growth could stall or decline in 2016.
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Re: China Peak Oil: 2015 Is the Year

Unread postby Pops » Wed 08 Jul 2015, 09:27:19

spot5050 wrote:pops you predict peak oil every year.

really? when was the last time?

ROCKMAN wrote:The bank expects China's production to rise 1.6 percent this year, although growth could stall or decline in 2016.

then peak would be... 2015?
lol
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Re: China Peak Oil: 2015 Is the Year

Unread postby steam_cannon » Wed 08 Jul 2015, 10:01:29

Just the first thing that came to mind when reading this thread and probably completely unrelated (lol) but have you all been following the China stock market crash going on? I like that China says they will be investigating people who were expecting a dip. That's China. And they are blaming an investing bubble and that's probably true, just like a hot air balloon is a bubble until the fuel starts running out.

China's Stock Crash: $3.5 Trillion Wiped Out, $2.6 Trillion Frozen
http://www.nytimes.com/2015/07/07/upsho ... .html?_r=0
http://news.slashdot.org/story/15/07/08 ... ion-frozen
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Re: China Peak Oil: 2015 Is the Year

Unread postby Pops » Wed 08 Jul 2015, 10:13:10

The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: China Peak Oil: 2015 Is the Year

Unread postby Pops » Wed 08 Jul 2015, 10:16:05

It might be related eventually but 3 weeks is a little early for a stock market crash to affect oil production I think. Actually, if cheaper oil price from higher production was to do anything, wouldn't it buoy markets?
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
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Re: China Peak Oil: 2015 Is the Year

Unread postby steam_cannon » Wed 08 Jul 2015, 10:51:57

Thanks for the China Watch thread link!

Yeah I'm probably jumping the gun on that. It's a little early for long term outlook to be influencing China stocks since fuel prices are looking good. But on the other hand if that was an influence, there are often investors who know when to pull out and China says they plan to investigate people who were expecting a down turn. So if there were investors taking the lead that raises the question of their motivation. Presently energy prices are good, but if 2015 is the year things get shaky I'd expect some investors to be aware of that. It's a weak connection, but big enough I'd expect it to influence the markets long term and plausible enough to make me wonder. If 2015 is the year for a predictable slowdown in energy avaliable for China, I'd expect there would be some people planning accordingly.

Anyway, too soon to know. When you have a hammer...
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Re: China Peak Oil: 2015 Is the Year

Unread postby dashster » Sun 02 Aug 2015, 21:16:03

spot5050 wrote:Here's a though: we are "hydrocarbon man".

Humans: Stone Age man, then Iron Age man then, something-or-other man..... then us: hydrocarbon man. 1000 years of hydrocarbon usage, coal, oil gas, then poof.. all gone.


1000 years of hydrocarbon usage? Good luck with that.
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Re: China Peak Oil: 2015 Is the Year

Unread postby ROCKMAN » Mon 03 Aug 2015, 01:24:44

IMHO China PO is of minor importance as the US peak in 1971. The much more important issue is China's PC...Peak Consumption. Spotty needs to dig up the ELM concept.
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