Coal gasification technology has been way overdue, about time more investment be made in it. Excess Carbon emissions can be used to feed algae tanks for biofuels at the same time.
This is a discussion on Securing China's Energy Future within the Members' Club Room forums, part of the China Defense & Military category; This issue may become far more important than Taiwan in the future and may dominantly shape China's social, governmental, technological ...
This issue may become far more important than Taiwan in the future and may dominantly shape China's social, governmental, technological and even military trends. Views, opinions, and articles on this matter can be posted in this thread.
Let's start with an article found by Hendrik 2000.
China builds plant to turn coal into barrels of oil
By Nao Nakanishi and Niu Shuping Tue Jun 3, 8:25 PM ET
ERDOS, China (Reuters) - With oil prices at historic highs, China is moving full steam ahead with a controversial process to turn its vast coal reserves into barrels of oil.
Known as coal-to-liquid (CTL), the process is reviled by environmentalists who say it causes excessive greenhouse gases.
Yet the possibility of obtaining oil from coal and being fuel self-sufficient is enticing to coal-rich countries seeking to secure their energy supply in an age of increased debate about how long the world's oil reserves can continue to meet demand.
The United States, Australia and India are among those countries looking at CTL technology but are constrained by environmental concerns associated with the process which releases excessive amounts of carbon gases into the atmosphere and consumes huge amounts of water.
But China, which lacks the powerful environmental lobbyists that might stymie any widescale initiative elsewhere, is building a major complex on the grasslands of Inner Mongolia.
"Those countries with large coal reserves, like South Africa, China or the United States, are very keen on CTL as it helps ensure energy security," said Yuichiro Shimura at Mitsubishi Research Institute Inc (MRI) in Tokyo.
"However, the problem is that it creates a lot of carbon dioxide. Also you need a huge amount of energy for liquefaction, which means you end up wasting quite a lot of energy," the chief consultant at MRI in charge of energy told Reuters.
In Erdos, Inner Mongolia, about 10,000 workers are putting the final touches to a CTL plant that will be run by state-owned Shenhua Group, China's biggest coal mine.
The plant will be the biggest outside of South Africa, which adopted CTL technology due to international embargoes on fuel during the apartheid years.
"We cannot fail," Zhang Jiming, deputy general manager at Shenhua Coal Liquefaction, told Reuters. "If things go smoothly, we will start with the expansion next year," he said.
The plant will start operating later this year and is expected to convert 3.5 million tonnes of coal per year into 1 million tonnes of oil products such as diesel for cars.
That's the equivalent of about 20,000 barrels a day, a tiny percentage of China's oil needs as oil consumption in China is around 7.2 million barrels a day.
If all goes well, then Inner Mongolia will push on with an ambitious plan to turn half of its coal output into liquid fuel or chemicals by 2010. This would be around 135 million tonnes, or about 40 percent of Australia's annual coal output.
The region, as big as France, Germany and England put together, hopes CTL will propel development while contributing to Beijing's plan to have CTL capacity of 50 million tonnes by 2020.
That would be about 286,000 barrels a day, or about four percent of China's energy needs based on current consumption.
UNITED STATES LOOKS AT CTL
CTL is also being considered by a number of coal-rich countries such as the United States, which has the world's largest coal reserves.
The relatively low cost of CTL produced oil given current oil prices, plus the chance to be more energy self-sufficient is a powerful incentive.
The technology is being seen in some quarters as offering an opportunity for the U.S. to reduce its dependency on other countries for oil and a small U.S. CTL industry is emerging.
DRKW Advanced Fuels plans to start construction on a plant in Wyoming next year in partnership with Arch Coal Inc and with technologies licensed by General Electric and Exxon Mobil. The defense department is experimenting with CTL in an effort to cut reliance on fuel from countries unfriendly to the United States.
But CTL is highly controversial. Experts say the whole lifecycle releases about twice as much carbon dioxide, the most common greenhouse gas, as fossil fuel. Liquefying coal also requires large amounts of energy and drains water supplies.
The fuel produced through this method has a shelf life of up to 15 years, unlike other motor fuels which is attractive to the military and to governments keen to ensure fuel security.
Though CTL technology was developed about 100 years ago, it has been little used, except in Nazi Germany and apartheid South Africa, which had difficulty accessing then-inexpensive oil.
Oil prices, which have more than quadrupled this decade to above $130 a barrel, have reignited interest in CTL.
The Oil and Gas Journal in April suggested it costs $67 to $82 a barrel to produce CTL fuel, based on the experiences of South Africa's Sansol. Exact prices would depend on a range of factors including coal and water prices and of course it is very expensive to build CTL plants.
Shenhua will be the first to use direct CTL technology on a large scale. It is different from indirect CTL, proven in Nazi Germany and by South Africa's Sasol, and converts coal directly into liquid fuel, skipping gasifying coal into syngas.
"CTL happened only twice in world history, and both times it's been in nations facing some kind of state of emergency with respect to energy. It should sound an alarm bell," said Gary Kendall, from the WWF conservation group.
"There are two defining issues in the 21st century: one is carbon dioxide and one is water ... And the (CTL) process is horrifically carbon intensive. It is also very water intensive."
The "holy grail" for CTL enthusiasts is to find a way to turn coal into liquid without releasing carbons into the air. The idea is that the carbon dioxide, the main global warming gas, would be captured and stored deep under ground.
Carbon capture and storage, which is still the subject of much research, would alleviate the environmental impact of carbon dioxide being released into the environment, the main argument against CTL by critics. This could spur CTL development in the United States and other western countries.
Coal lobbyists in the U.S. have been clamoring for more research into CTL but they have failed to override environmental concerns due to the carbon emissions of the process. Pro-CTL amendments were dropped from the 2007 U.S. energy bill.
"If there is no good solution for CO2, the (CTL) industry will not flourish," Chen Linming, executive vice president at Sasol China, told a conference last month, urging the government to support carbon capture and storage technology.
Shenhua and Sasol are conducting a feasibility study to build two more CTL plants in the provinces of Shaanxi and Ningxia.
Whether CTL technology could ever be used on a large-scale will depend on how coal companies deal with the massive amount of water used in the process.
China faces serious water shortages and the Gobi desert, which spans across Inner Mongolia, is expanding rapidly. There are drinking water shortages in northwest China and ground water levels are sinking every year.
Shenhua plans to use ground water and recycled water from coal mines to supply the 8 million tonnes it will need a year.
Yet Zhang said it would need to tap other sources, such as the Yellow River, in the second phase. He would not disclose how much the company spent to build the complex, or how much carbon dioxide it is expected to emit.
"There's no doubt with oil at over $100 a barrel, CTL is very economic ... However the constraint is the availability of water," said Michael Komesarroff from Urandaline Investments.
"The Yellow River often dries up ... In some parts of China, 30 years ago, the water table was 5 meters below the ground. Today it is 35-40 meters below the ground because they take the ground water in an unsustainable way."
Environmentalists say that rather than invest in a process that will probably never be environmentally sound, China and other countries should move towards running cars on batteries rather than liquid fuel.
"If China's primary concern is energy security, then I think you would want to take the most efficient way of using the resources," said WWF's Kendall.
"If you turn coal into electricity at high efficiency, and charge electric vehicles, you can get three times as many kilometers per unit of coal."
"Lets do a thermal sweep."
Coal gasification technology has been way overdue, about time more investment be made in it. Excess Carbon emissions can be used to feed algae tanks for biofuels at the same time.
Two latest stories here with significance not only with regard to new energy sources but also how they'll help to alleviate the choke points issue of Middle East oil to China, ie a pipeline each from Central Asia & Myanmar.
If/when the plan of a Pakistan pipeline for ME oil to go to China becomes viable, the energy security issue will be further reduced.
Turkmenistan to export gas to China in 2009 - Berdymukhammedov
ASHGABAT, June 27 (Itar-Tass) - In 2009 Turkmenistan will be exporting natural gas from the right bank of the Amu Darya River through Uzbekistan and Kazakhstan to China, Turkmen President Gurbanguly Berdymukhammedov said making a welcoming address to the participants in the construction of a gas treatment facility at the Samandepe field that has been launched.
It is located on the right bank of Amu Darya and is part of the Bagtyyarlyk agreement territory according to the production sharing agreement with the Chinese National Oil and Gas Company. The future gas pipeline will run from this place.
“Diversification of the transportation of energy carriers to world markets is a priority sphere in the fulfilment of the country’s resource potential,” the president noted in his address. “According to independent foreign experts, our gas reserves are 24.6 trillion cubic metres,” the head of Turkmenistan stressed.
The cost of the Turkmenistan-China gas pipeline with a total length of 1,818 kilometres will exceed 6.7 billion US dollars, according to the state agency for management and use of hydrocarbon resources under the Turkmen president.
Over 500 million dollars have already been attracted for projects aimed at the development of the Bagtyyarlyk agreement territory. Complex work to prepare wells is currently underway. It is planned to build at the Samandepe gas field facilities for gas storage and treatment, as well as the compressor and measuring stations. In accordance with the general agreement on the construction of the Turkmenistan-China gas pipeline, the annual deliveries of natural gas will reach 30 billion cubic metres.
Daewoo consortium signs gas supply deal with China
Mon Jun 23, 2008 1:14am BST
SEOUL, June 23 (Reuters) - South Korea's Daewoo International (047050.KS: Quote, Profile, Research) said on Monday its Myanmar gas consortium had agreed to sell natural gas to China National Petroleum Corp.
Daewoo, which operates Myanmar's A-1 and A-3 natural gas fields, said in a regulatory filing its consortium had signed a memorandum of understanding with CNPC on Friday over the sale and transportation of natural gas from the project.
Daewoo has a 51 percent stake in the fields, followed by India's Oil and Natural Gas Corp (ONGC.BO: Quote, Profile, Research) with 17 percent, India's GAIL (GAIL.BO: Quote, Profile, Research) with 8.5 percent and South Korea's Korea Gas Corp (036460.KS: Quote, Profile, Research) with a 8.5 percent and Myanmar Oil & Gas Enterprise with a 15 percent.
CNPC is the state-owned parent of listed PetroChina 0857.KS.
The deal comes after China surprised markets last week by raising its nationwide fuel prices by up to 18 percent in its biggest one-off hike. [ID:nL1914615]
Few western companies will invest in the former Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.
China, typically wary of supporting or imposing sanctions and one of Myanmar's few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.
Daewoo said last year it had picked China as a preferred bidder for natural gas from a project in Myanmar, putting it at the front of a queue that also includes India and Thailand.
Myanmar officials have also said the gas will go to China and Beijing says it is considering building gas and oil pipelines into southwestern Yunnan province. This would improve access to its neighbour's rich resources, eyed by many energy-hungry nations across Asia.
Myanmar has at least 90 trillion cubic feet of gas reserves and 3.2 billion barrels of recoverable crude oil reserves in 19 onshore and three major offshore fields.
Altogether, 25 offshore blocks are under exploration, 12 of them in the Gulf of Martaban, six off the Tanintharyi coast and seven off the Rakhine coast.
CNPC controls listed PetroChina, which has come under pressure from activist shareholders because of its parent firm's investments in Sudan.
The supply of gas from the project will be adjusted every quarter based on international energy prices, Daewoo said. (Reporting by Miyoung Kim; Editing by Keiron Henderson)
That last article talking about the oil and gas pipeline from the Indian Ocean, through Myanmar (from the port of Kyaukphyu), to China's Yunnan Province is a very underrated issue.
Although building those pipelines are already underway and may take a few years, they very low-risk/high-reward pipelines to build. If they can be expanded enough in the future, they can help China limit its oil import trip from Africa and the Middle East by two weeks (supposedly?) and allows oil tankers to avoid the Strait of Malacca.
I don't know if a pipeline through Pakistan is secure enough. The Pakistani military has trouble safe-guarding lots of those frontier areas. Those areas are essentially sovereign. Building pipelines through those areas might be a huge risk (more so than Myanmar).
The big nuke companies of the world salivated when China announced its plan to buy 40 nuclear reactors. China just notified Westinghouse that it wants 100 of their reactors by 2020.
China wants 100 Westinghouse reactors
By Bonnie Pfister
Saturday, June 28, 2008
China wants to have 100 of Westinghouse Electric Co.'s nuclear reactors in operation or under construction by 2020 -- more than double what was anticipated, according to the company's incoming CEO.
Aris Candris, who will lead the Monroeville-based firm beginning Tuesday, said Chinese officials shared those plans with Westinghouse during a mid-May meeting.
"It is huge," Candris said in an interview Thursday with the Tribune-Review. "Originally we were thinking somewhere around 40."
"This is the beginning of the nuclear renaissance," he said. "Growth is good, but it's also a management challenge."
He succeeds Steve Tritch, who is retiring after 37 years with the company, the past six as CEO. Tritch remains chairman of the board of Westinghouse, a global leader in reactor engineering, construction and maintenance. Westinghouse's technology is the basis for nearly half of the world's 440 nuclear power plants, including 62 of the 104 in the United States.
Candris, 57, who joined the company in 1975 and most recently ran the fuel business, takes over as the industry enjoys renewed support and federal subsidies meant to promote a cleaner alternative to coal-burning plants.
Its AP1000 reactor, which can generate enough power to electrify 700,000 homes, is the technology of choice for half of the 30 reactors planned for the United States. This spring Westinghouse signed deals for four domestic reactors, the first such contracts to be signed in this country in 30 years.
Last year the company beat out French rival Areva to win a $5.3 billion contract to build four AP1000s in China. Although Westinghouse will transfer the technology to Chinese licensees over the next few years, Candris said, it will build several additional plants with partner The Shaw Group, of Baton Rouge, La.
Westinghouse books higher revenue from plants it actually builds, but the licensing strategy frees the company to pursue research and development.
"There are a number of entities over the years that we have licensed -- Areva, Mitsubishi in Japan, Doosan in Korea. In all cases, those became long-term relationships, with long-term benefits for both," Candris said.
Design will begin this year on a 1,700-megawatt reactor, he said, that could be targeted to energy-hungry China and eventually India.
Plans for domestic reactor construction are moving briskly. Candris said contracts for two AP1000s each at three Southeastern U.S. utilities will be signed in the next nine months; the first deal is likely by summer's end. He said he was not worried that soaring costs of steel, copper and cement would hurt his industry, because those costs equally affect construction of other kinds of power plants.
Growth has prompted Westinghouse to hire nearly 3,000 people worldwide over the past three years, he said, and the Monroeville office is at capacity. About 350 instrumentation and control staffers last month moved to rented space in Cranberry, adjacent to a Westinghouse headquarters under construction. The 2,000 or so Monroeville staffers are to relocate next June.
A post stating China's first coal fed, synthetic fuel plant will start trial production in September.
中国神华集团位于内蒙古鄂尔多斯的直接液化煤制油项目将在三个月后的9月份投入试生产，这一投资100亿元 的大型煤制油项目，目前进入了调试阶段。由于国际油价在高位运行，这给煤制油项目带来了较大的利润空间。世 界论坛网 http://www.wforum.com/gbindex.html
现在国际认可的煤制油技术分为两类，直接液化和间接液化。在我国直接液化项目只有神华集团一家在进行， 间接液化技术则有南非沙索与神华集团合作的项目，以及内蒙古伊泰、兖矿集团进行的小规模煤制油项目。世界论 坛网 http://www.wforum.com/gbindex.html
神华煤制油项目是国家重点建设项目之一，于2004年8月开工建设，项目设计年产油品500万吨。神华 煤制油项目负责人此前曾向《第一财经日报》表示，等该项目成熟后，还可能会注入到上市公司中国神华（601 088.SH）里。世界论坛网 http://www.wforum.com/gbindex.html
平安证券研究员陈亮表示，以目前的工艺可以看出，每产一吨成品油，直接液化消耗原煤是3~4吨，而间接 液化则消耗4.5~5.5吨；每吨油品产出中，直接液化耗水量为5~6吨，间接液化项目的耗水量则是8~1 2吨。从单位投资金额计算，前者的每万吨产能是0.8亿~1.1亿元，而间接液化则是1.1亿 ~1.3亿元。世界论坛网 http://www.wforum.com/gbindex.html
“投资比较大是事实，但需要将时间放得更长远来看。”陈亮指出，以目前已量产的南非沙索公司为例，其2 006年预计煤制油的盈亏平衡点，与国际原油价格45美元/桶相若。世界论坛网 http://www.wforum.com/gbindex.html
由于全球性的通货膨胀影响，预计煤制油的盈亏平衡点上升到50美元，“神华集团的这个直接液化项目，其 煤炭本身的成本是比较低的，因为由神华直接供应货源，更高的成本体现在固定资产投资上。”世界 论坛网 http://www.wforum.com/gbindex.html
根据《煤炭工业发展十一五规划》（下称《规划》），国家倡导我国积极开展气化液化等用煤的资源评价，做 好煤化工基地规划，调控煤化工建设规模。世界论坛网 http://www.wforum.com/gbindex.html
《规划》指出，“十一五”期间，要完成煤炭液化、煤制烯烃的工业化示范，示范工程包括：采用国内开发的 工艺和高效催化剂技术，建成100万吨/年煤炭直接液化示范工程，完成具有自主知识产权的煤直接液化工艺的工业化示范；引进国外成熟技术，建设30 0万吨/年的间接液化工厂，并完成商业化运行示范；采用不同的自主知识产权技术，分别完成16万吨/年和100万吨/年间接液化示范装置和示范工程；采用自主知识产权技术，完成60万吨/年煤制烯烃示范工程。世界论坛网 http://www.wforum.com/gbindex.html
不过，虽然目前原油价格高昂且不能很快回落，煤制油项目有一定的利润空间，但仍有两道“门槛”需要迈过 。世界论坛网 http://www.wforum.com/gbindex.html
首先，我国成品油价格还未与国际市场接轨。如果一旦煤制油投产，走零售渠道的话，销售价格将会受到限制 ，这会减少煤制油企业的利润，同时可能会使得正在研发这一新技术的动力趋缓。世界论坛网 http://www.wforum.com/gbindex.html
其次，煤制油技术仍然处于摸索阶段。神华集团这一套100万吨/年的项目，完全依靠自主研发。而神华集团位于宁夏、陕西的两个间接煤制油项目估计要在 2015年到2016年才可能运营，其他煤制油业务最快也要在2到3年后建成，因此不可能很快成为一个替代 传统炼油业务的新能源项目。
"Lets do a thermal sweep."
To secure it energy requirement what is better than building a pipe line to Yunan from Myanmar
China signs natural gas deal with Myanmar 01 July 2008
(c) 2008 Singapore Press Holdings Limited
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Pact boosts Beijing's energy security and may speed up plans for pipeline linking the two countries
IN BEIJING - CHINA has signed a new deal to buy and pipe natural gas from neighbouring Myanmar to southern Yunnan province, a move that could boost plans for an ambitious oil pipeline along the same route.
An oil pipeline linking Myanmar's western coast with Yunnan in China has been talked about for years as a possible solution to the country's 'Malacca Predicament'. This is a reference to the mainland's overwhelming reliance on the Strait of Malacca as the main transit route for oil imports to feed its booming economy.
About 80 per cent of the crude oil that China imports from the Middle East and Africa has to sail through the Strait of Malacca and up through the South China Sea before reaching the mainland's eastern coast.
This has prompted fears in Beijing that the busy strait could become a potential choke point where China's rivals could shut down its access to oil and raw materials in the event of a conflict.
The proposed Myanmar- Yunnan oil pipeline will ease this problem, at least on paper, by allowing tankers to unload their cargoes on the western coast of Myanmar before the oil is piped to the mainland.
This would boost China's energy security, and potentially cut costs and shipping times.
But the prohibitive cost, as well as the political uncertainties involved in such a project, could still emerge as stumbling blocks, observers say.
Politics likely played a huge part in China's decision not to highlight the natural gas deal. It announced it in the state media only 10 days after it was signed in Myanmar's capital, Naypyidaw.
Myanmar's military junta has come under severe international criticism for its crackdown on anti-government protests last year, as well as its sluggish response to the recent cyclone which killed tens of thousands of people.
The lucrative natural gas deal, however, would bolster the generals' ability to continue resisting threats of international sanctions over their rule.
According to a recently released Myanmar government report, foreign investment in the country's oil and gas sectors more than tripled last year to US$474.3 million (S$645 million).
That figure accounted for 90 per cent of all foreign investment in Myanmar last year of US$504.8 million.
China's success in clinching the pact also likely came at the expense of India, which is competing for influence in Myanmar and also reportedly in hot pursuit of this natural gas deal.
Chinese state media reports gave no details of the politically sensitive deal, such as its value or commencement date. It merely said that it involved the A-1 and A-3 offshore natural gas blocks in Myanmar.
According to Reuters, South Korea's Daewoo International Corp has a 51 per cent stake in the fields, followed by India's Oil and Natural Gas Corp with 17 per cent, India's GAIL with 8.5 per cent, South Korea's Korea Gas Corp with 8.5 per cent and Myanmar Oil & Gas Enterprise with 15 per cent.
Under the deal, signed on June 20, the mainland's China National Petroleum Corp will work with these five partners for the 'sale and transportation' of the Myanmar natural gas.
'This signalled the full launch of China and Myanmar's collaboration in natural gas,' the official Xinhua news agency said yesterday.
'This is also an important part of the cross-border energy network that has been in the works for years.'
News of the natural gas deal came in the same month that saw Beijing raise fuel prices by 18 per cent - its highest one-time increase ever.
Yesterday, China's top economic planning agency, the National Reform and Development Commission, ordered a freeze on major public transport fares in a bid to curb a 'chain reaction' that would lead to higher inflation.
But with crude oil prices hitting fresh highs in international markets, a rise in transportation costs seems inevitable in China, despite government price controls.
Meanwhile, Chinese airlines yesterday received the green light to raise domestic fuel surcharges by up to 50 per cent.
Related to the Turkmen deal few days ago, the Uzbek section of the pipeline to China begins construction.
Uzbekistan Launches Construction of Gas Pipeline to China
Uzbekistan, Tashkent, 2 July / corr. Trend Capital T.Zhukov / The construction of the Uzbekistan-China gas pipeline began in Bokharan region. The first weld attachment of a gas pipeline was implemented in the frontier region with Turkmenistan, the Uzbekneftegaz National Holding Company (NHC) told Trend Capital. The project is being realized within the framework of intergovernmental agreement on principles of the construction and exploitation of the Uzbekistan-China gas pipeline, with the length of 525km.
The Uzbek and Chinese Asia Trans Gas Joint Venture (JV) Limited Company (Ltd) was appointed a customer and financing company to realize this project at the loan. The JV was committed in designing, construction and further exploitation of this gas pipeline. The Uzbekneftegas NHC and the China National Petroleum Corporation (CNPC) are the founders of the joint venture each holding equal share (50%). The lump cost of the project amounts to $2.1bln.
The company said that the project envisaged the construction of two lines. The first line of a gas pipeline will be put into exploitation in December 2009, the second in 2011 at the special governmental decree issued by Islam Karimov, the Uzbek President.
It is planned to construct three gas-compressor stations, measuring units, camps and other infrastructure facilities in the direction of main gas pipeline to be built in the territory of Kashkadarinski, Bokharan, and Navoiyski regions.
Ergash Shoismatov, the Uzbek Premier Minister, the Deputy Chairman of the State Committee on Development and Reforms of China, Chjan Gobao, the chairman of the State Bureau on energy supply, and Lyao Yunyuan, the vice-president of the China National Petroleum Corporation (CNPC), participated in the opening ceremony of beginning of the construction.
The correspondent can be contacted at: email@example.com
If anyone is interested in the proposed (and probably building has already begun) pipelines from Myanmar's coast to China's interior, here are some maps from previous articles that I've been reading since last year:
Compare the distance between the Myanmar-China gas/oil pipeline to having tankers actually hauling this stuff around through the Indian Ocean, through the Strait of Malacca, and through the South China sea before reaching Chinese waters.
The Chinese government is taking it slow, by proposing only a single pipeline or two for now, but if Myanmar can be stabilized politically and China expands to a few pipelines, I wouldn't be surprised if China can almost ween itself off of having to go the circuitous naval route.
The best place to secure energy is your own backyard. Unfortunately most of the recent big oil find occur in deep water But drilling 5000 m in ocean require High Technology and China has yet to produce domestic Deep sea drilling and Knowhow but buying company that own that technology will sure close the gap
China’s move signals oil and gas ambition
By Ed Crooks
Published: July 8 2008 01:52 | Last updated: July 8 2008 01:52
Oil rigs are scarce commodities these days; so scarce that it can be easier to buy a company that owns them than to buy the rigs themselves. That is one of the main motives behind China Offshore Services’ $2.5bn acquisition of Awilco Offshore.
There has been a high level of sensitivity over Chinese companies’ acquisitions of natural resources, most notoriously in the attempt by China National Offshore Oil Company, COSL’s parent, to buy Unocal of the US in 2005.
China Oilfield to buy Awilco for $2.5bn - Jul-07Lex: China Oilfield buys Awilco Offshore - Jul-07CPC hopes to revive ties with CNOOC - May-06Tight supply lets CNOOC shrug off slowdown - Jan-29Chinese go where western firms fear to tread - Jan-28Energy: Beijing learns to tread warily - Jan-23The takeover of Awilco, while likely to be far less politically sensitive, is a sign that oil rigs are themselves valuable resources.
As China’s mature onshore fields decline, future production growth is exp*ected to come from the relatively undeveloped offshore fields. Buying Awilco will give CNOOC additional rig capacity to deploy in the waters of Bohai Bay and the South China Sea.
Recent exploration success in Chinese waters has raised hopes this will prove a successful strategy. Petro*China’s Jidong Nanpu discovery in Bohai Bay, announced last year, has been estimated at 7bn barrels, making it China’s biggest oil find for 50 years.
The potential of the South China Sea could be even greater. In the 1980s, China suggested it could hold more than 200bn barrels.
The agreement this year between China and Japan over rights to oil discoveries in the Eastern Sea, which had been disputed waters, has opened up another potentially fruitful territory for exploration.
The biggest obstacle for the Chinese and others hoping to explore these areas is a shortage of resources. Offshore areas, particularly in deep water, are the focus of exploration efforts the world over, in regions such as the Gulf of Mexico, west Africa and Brazil.
The resulting demand for drilling rigs and other offshore equipment has sent prices soaring.
Costs of developing oil and gas exploration and production projects have doubled since 2005, according to IHS, a consultancy. An average semi-submersible rig, for use in deep water, costs about $300,000 per day to hire, according to Rigzone, the data service.
Even at those prices it can be difficult to secure a rig. Some 89 per cent of the world’s stock of 610 rigs were in use last month according to Rigzone. Place an order for a new rig today and delivery is unlikely before 2012.
Awilco has five jack-up rigs, for shallower water, with three more under construction. The company also has three semi-submersibles to be delivered, with an option for another two.
One important element in the due diligence that COSL undertook on Awilco was to reassure itself that the rigs being built in Chinese yards would be delivered on time and on budget.
Some of the rigs have been contracted already, for use by Awilco’s customers in Norway and round the world, but sooner or later they can be redeployed to Chinese waters. Apart from the additional rigs, adding to COSL’s 15 rigs, the Awilco fleet is also much younger and can operate in deeper waters.
Awilco will also bring a high level of expertise. Thanks to its experience in the North Sea, Norway is one of the world’s leading centres for offshore operations. COSL plans to promote some of Awilco’s managers to senior ranks in the merged company.
The prospects for that application of technology and expertise to China’s offshore industry are enough to justify the deal.
But COSL’s ambition to develop itself as a global player in oil services will be rather harder to reach.
Awilco has a blue-chip customer base of oil companies including BP and ConocoPhillips, and COSL hopes to continue to serve those customers.
But oil services companies have generally resisted the idea of linking up with exploration and production companies, saying it would impede their ability to serve a range of clients. The only prominent counter-example is Saipem of Italy, 43 per cent owned by Eni.
The fact that COSL is prepared to run that risk is evidence that, after a very quiet year in 2007, Chinese companies are again back as ambitious bidders in oil and gas mergers and acquisitions.
Chris Sheehan of consultancy John S. Herold, says: “The Chinese know that it is a marathon, not a sprint, and they are going to go after companies in regions that are important to them.”
The Kazakhstan section of the Central Asian pipeline to China starts construction few days after work started in Uzbekistan & Turkmenistan as well. Should reduce the reliance of CA oil/gas on Russian export routes.
Kazakhstan starts building gas pipeline to China
Wed Jul 9, 2008 11:49am BST
By Olzhas Auyezov
NEAR ALMATY, Kazakhstan, July 9 (Reuters) - Kazakhstan joined construction of a pan-Central Asia pipeline on Wednesday, a major project to link up Caspian Sea gas reserves with energy-hungry China.
The pipeline is the first significant independent gas link connecting the former Soviet region with eastern markets while bypassing Russia. Russian gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research) is currently the main buyer of Central Asian gas.
Under the scorching sun of southern Kazakhstan, Kazakh and Chinese flags flapped in the wind as engineers assembled segments of the pipeline in a symbolic ceremony attended by senior energy officials.
"This project will be implemented in five stages with the final stage scheduled for completion by 2013," said Sauat Mynbayev, Kazakhstan's energy minister.
The ceremony was held on the open steppe 40 kilometres (25 miles) north of the commercial hub Almaty -- one of 3 sites in Kazakhstan where construction began simultaneously on Wednesday.
The Kazakh link is part of a route that links Turkmenistan's natural gas deposits with China via Uzbekistan and Kazakhstan.
Uzbekistan also started construction of its part this month while Turkmenistan launched its segment last year.
Gas shipments will start in 2010 at 4.5 billion cubic metres (bcm) a year and will eventually reach 40 bcm a year. China will receive 30 bcm and Kazakhstan 10 bcm for its southern regions which face an energy deficit due to growing consumption.
China's CNPC, the leading operator of the project, has signed deals with state oil and gas firms of Turkmenistan, Uzbekistan and Kazakhstan giving them 50 percent stakes in their respective parts of the pipeline.
It has yet to announce the project's cost. Mynbayev declined to give the figure for the Kazakh part on Wednesday.
Turkmenistan, sitting on Central Asia's largest gas reserves, will be the major supplier of the 7,000 kilometre (4,350 miles) pipeline.
Kazakhstan, which hosts 1,300 kilometres (800 miles) of the pipeline, plans to extend its part in the future, connecting it to its own gas fields near the Caspian.
Russia's Gazprom buys about 50 bcm of Turkmen gas annually for resale in Europe. It also imports about 11 bcm from Uzbekistan and 8 bcm from Kazakhstan.
To maintain its influence over Central Asian gas flows, Russia has signed agrrements with Turkmenistan, Uzbekistan and Kazakhstan to build a new pipeline along the Caspian.
Gazprom has also vowed to pay European prices for Central Asian gas from 2009, but the exact figure has not been revealed.
China's Wind Power Industry: Blowing Past Expectations
by Lou Schwartz & Ryan Hodum, China Strategies, LLC
At the end of 2007, China's installed base of wind power totaled just over 6 gigawatts (GW), making China the fifth largest producer of wind power, after Germany, the U.S., Spain and India. As a consequence of the rapid build-out of wind power projects in China, in April 2008 the National Development and Reform Commission revised its 11th Five Year Plan Period plan for wind power development from 5 GW to 10 GW by 2010.
By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.
More impressively, wind power industry statistics show that by the end of 2008 China's total installed base of wind power production will have already reached 10 GW, two years ahead of the revised plan. Some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW.
Estimates by experts in wind power development in Inner Mongolia have an even more optimistic assessment; they believe that by 2010 China's total installed base of wind farms will total 27,700 megawatts (MW) and that China will then be the fourth largest producer of wind power in the world. The Inner Mongolia experts further predict that China will become the third largest producer of wind power worldwide by 2015.
From Xinjiang in China's far west to Shanghai, wind power projects are being developed across China. Below are highlights of local efforts to build-out wind power capacity throughout China.
Of the 230 million kilowatt-hour (kWh) wind potential throughout China, it is estimated that Inner Mongolia has wind resources of approximately 101 million kWh or 40% of the total. There are some 200 companies that already have entered or plan to enter Inner Mongolia's wind power industry.
Through the end of 2005, total installed on-grid wind generating capacity was 170 MW and there is another 962.1 MW of installed wind generating capacity already under construction. By the end of 2010 Inner Mongolia expects to have a total of more than 5 GW of wind projects operating, which will amount to 7.5% of total power generating capacity in the region.
Yet based on the announced projects, it is likely that the total amount of wind power capacity in Inner Mongolia by the end of 2010 will exceed 5 GW. For example the city of Chifeng already has entered into an agreement with the Datang Company to develop 1 GW of wind power and by the end of 2010 Chifeng city alone is expected to have total installed capacity of 1.5 GW.
The Hexi (west of the Yellow River) corridor near Jiuquan city, which has been dubbed the "Land-Based Three Gorges," is the locus of development of Gansu Province's substantial wind resources. In this area there is an estimated 10,000 square kilometers of land which can be used for wind power development and the estimated capacity that can be developed there is 40 GW.
Though Gansu Province's long-term wind power development plan calls for the construction of 18 large and mid-sized wind farms with a total installed capacity of 20 GW, through the end of 2007 there were a total of 500 MW of wind farms operating, with another 1 GW in planning. Gansu's plan calls for 3 GW to be added in the last three years of the 11th Five Year Plan period, so that by 2010 there will be 4 GW of wind power in operation in Gansu Province. By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.
The province of Shandong is undergoing a boom in wind power development. There are five wind farms that were under construction in 2007, including one each in Rongcheng, Dongying, Zhanhua, Shougang and Weihai. In total these five wind farms are to cost 2.5 billion Yuan and provide a total of almost 300 MW of power generating capacity. Because Shangdong Province is a coastal province bordering the East China Sea, provincial officials estimate that the province has upwards of 67 GW of wind power resources; this is equivalent to 3 Three Gorges Projects.
Long term, engineers in Shangdong believe that there can be as many as 38 wind farms producing power in Shangdong. According to the provincial government's plan, Shandong will have 1 GW of wind power generating capacity by 2010 and 3 GW by 2020.
Heilongjiang Province and its capital Harbin also are making strides to develop wind power. Surveys indicate that the wind resources in Harbin alone are equivalent to 10 GW of power and that with existing technology the exploitable wind power in Harbin is ~ 1 to 2 GW. The Mulan Wind Power Plant, which was started up in 2004, has installed capacity of 12 MW.
According to a National Development and Reform Commission plan, Shanghai will build a total of 13 land and sea-based wind farms in Nanhui, Qinjian and three islands (Chongming, Changxing and Hengsha). By 2020 Shanghai will have a total of 1 GW of installed wind power generating capacity, which will be sufficient to supply power to 4 million residents. Presently Shanghai has three wind farm projects operating, including the Shanghai New Energy Environmental Protection Engineering Co., Ltd.'s four wind turbines with combined capacity of 34 MW; the Shanghai Wind Power Development Co., Ltd.'s 21 MW wind turbines; and the 13 wind turbines located in Nanhui and Chongming which produce 42 GWh/year combined.
The Ala Mountain Pass region of Xinjiang Province is one of that province's best locations for the development of wind power projects. According to plans developed by the provincial government by the end of the 12th Five Year Plan period (in 2015) this area will have an installed base of wind farms totaling 1 GW.
Construction has been completed on the first stage of the Beijing Guanting Wind Farm project. The thirty-three windmills have a total capacity of 50 MW. Based on average consumption by Beijing residents of 1000 kWh/year, the Beijing Guanting Wind Farm will be able to provide power to approximately 100,000 households. After the second phase of the Beijing Guanting Wind Farm is constructed (by 2010) the project will be generating 100 MW in clean wind power.
Hainan Province has drafted a plan to encourage the development of 13 wind farms to be located primarily in the Eastern, Northwestern and Western coastal areas of the province. The anticipated total capacity of wind power to be developed in Hainan through this plan is more than 1.2 GW; of this total Hainan Province anticipates having between 4 and 6 wind farms operating by 2010 with total installed capacity of 250 to 300 MW at a cost of approximately 3 billion Yuan. By 2015 Hainan Province's installed capacity to produce wind power will have grown to 400 MW and by 2020 will grow again to 600 MW.
The Daan city region is the location of some of Jilin Province's most plentiful wind resources; with an area of some 1200 square kilometers that region has the potential to develop as much as 6 GW of wind power. If the full potential of the Daan city region's wind resources were exploited, as much as 12 billion kWh of power could be generated from wind power in that region, which also has good infrastructure for the transmission of power generated there.
Because wind power is proving to be a cost competitive source of power for this energy thirsty nation, the Chinese are aggressively ramping up capacity wherever wind resources can be found. As Chinese manufacturing prowess is increasingly put at the disposal of the wind power industry and the cost of wind power further declines, the rate of growth of wind power installations will continue to accelerate.
"Lets do a thermal sweep."
More on China's role in green energy. Not only will China's own adoption of green energy be critical to the world, if they can achieve the 'China price' to green technologies like they did to many consumer goods in the past, such technologies will become vastly more affordable to all especially the developing world.
China to Be World's Top Manufacturer of Green Energy Technology
By Jim Efstathiou Jr.
Aug. 1 (Bloomberg) -- China, the world's biggest greenhouse- gas emitter, is poised to lead world production of solar cells, wind power turbines and low-carbon energy technology.
China is already the world's largest renewable-energy producer as measured by installed generating capacity, according to a report today from the Climate Group, a coalition of companies and governments that support solutions to global warming. The country is also the world's top manufacturer of solar cells and will be the leading exporter of wind turbines by 2009.
China's position as a renewable-energy consumer and manufacturer runs counter to its ranking as one of the world's biggest polluters and the country's rapid expansion of coal-fired power generation. About 75 percent of China's electricity comes from coal, said Changhua Wu, China director for the Climate Group, who is based in Beijing.
``They have to do clean energy because they can't just do more and more dirty energy,'' said Michael Liebreich, chief executive officer of London-based New Energy Finance Ltd., which provides research to clean-energy investors. ``We're seeing China as being a Number 1, 2 or 3 player in lots of different sectors in this industry.''
China is closing older coal-fired power plants and replacing them with more efficient coal generators, Changhua said in a July 25 interview. While China will continue to rely on coal to fuel its rapid economic growth, state officials understand the need to transition to clean energy, she said.
The government wants to reduce the amount of energy China uses to produce each unit of economic output by 20 percent in two years and has told its 1,000 largest energy-consuming companies to cut their power consumption even more, according to the report.
Meantime, the government is imposing emergency traffic and industrial production restrictions to lessen pollution during this month's Olympic Games in Beijing.
Leaders ``really understand the issue,'' Changhua said. ``They know the urgency of the issue. They know the impact of the issue not only to the world but to China.''
About 16 percent of China's electricity came from renewable sources in 2006, led by the world's largest number of hydroelectric generators, according to the report. The nation's goal is to increase the proportion of renewable electricity to 23 percent by 2020.
China invested over $12 billion in renewable energy in 2007, second only to Germany. The nation needs to invest another $398 billion to reach its 2020 renewable energy goals, an average of $33 billion a year, the report said.
Getting Things Done
``The system in China compared to many other countries seems to be more effective,'' Changhua said. ``Basically, if the top leadership in Beijing decides to drive this kind of effort, they really get things done.''
China, which leads the world in production of solar photovoltaic technology, has doubled its output of solar panels in each of the last four years, according to the report. Suntech Power Holdings Co., based in Jiangsu, is the world's third- biggest supplier of solar cells. China's six largest solar-cell makers had a market value of over $14 billion at the beginning of this year.
China is exporting solar panels to developed countries better able to pay the higher costs of generating electricity from the sun, Liebreich said. Domestic production of cheaper wind power is advancing, Liebreich said.
``I don't think they want to shackle themselves to high electricity costs just to develop an industry,'' Liebreich said in a July 30 interview. ``Wind is a more mature industry. There isn't the same economic penalty today to implement wind.''
In 2007, each of China's 1.3 billion people emitted 5.1 tons of carbon, less than the 8.6 tons from each European and the 19.4 tons for each American. Last month, the world's richest countries, which are responsible for almost half the world's emissions, pledged to cut heat-trapping pollution by at least 50 percent by 2050.
The Group of Eight nations didn't specify how to make those reductions or provide intermediate targets. Developing nations including China said industrialized nations should commit to emissions cuts of at least 25 percent by 2020 and 80 percent by 2050.
Last Updated: July 31, 2008 19:00 EDT
PetroChina announces immense gas reserve in Sichuan
By STAFF EDITOR
Published: August 01, 2008 04:40 PM
PetroChina (PTR.NY, 601857.SH, 0857.HK) has discovered a natural gas reservoir in western China's Sichuan province that is conservatively estimated to hold 300 billion cubic meters of gas, China Business News reported. Asia's largest oil company said it would make a formal announcement about the gas reserve in October. It is located at the intersection of Yilong, Yingshan and Pingchang counties. "300 billion cubic meters is a minimum projection," said an inside PetroChina source. "It is likely to measure up to 500 billion, or even 1 trillion cubic meters, meaning 1 billion tons of oil equivalent." PetroChina announced the discovery of a 1 billion ton oil field in northern China's Hebei province during May Day last year; it was the largest discovery in more than 40 years and the announcement led to a US$1 drop in international oil prices on the day.
"Lets do a thermal sweep."