Wednesday, October 15, 2008

China - Oil Production

China is a net importer, but its status as the second largest petroleum consumer along with its ambiguous production situation makes it the most interesting oil story next to Saudi Arabia.

Its thriving economy and double-digit increases in petroleum consumption are setting it on a path to conflict with other importers as it tries to secure future supplies. For the last few years there have been many forecasts of China's production plateauing and falling. So far that hasn't happened. Yet interestingly, if we look at the oil China has already produced and its known reserves, we can get a good look at the problems involved with forecasting peak oil using Hubbert's methods. China was the first good example that demonstrated this issue, but I will cover more countries in the coming months.



Notes on reserves and 70% URR

The BP Annual Statistical Review starts tracking production in 1965, but that is sufficient in this case. China produced an average 227,000 bpd of oil in 1965, or about 6% of their present production level. This strongly suggests that previous to 1965 China's cumulative production was no greater than 500 millions barrels or a billion barrels. At the end of 2008, China will have produced a total of about 38 billion barrels. In 2008, China will produce 1.38 billion barrels.

BP lists China's proved reserves at the end of 2007 as 15.5 billion barrels, minus the 1.4 used this year leaves them with 14.1, meaning that the current rate, they would run out of oil in 10 years. But we know that oil production does not behave in that manner and they won't simply be out of oil 11 years from now. Production drops and tapers off. I've constructed the following chart to illustrate one possibility based on the available data.

Adding 38 billion barrels to 14.1 billion barrels we get 52.1 billion barrels of what are commonly referred to as URR, or ultimately recoverable reserves. This means that presently we are at 73% of URR. According to Hubbert, production should level off and start dropping around 50% of URR, suggesting China's production should have started dropping in the early 1990s at the latest.

But let's continue. Over the last 20 years, China has discovered and added to its proved reserves an average of about 1 billion barrels per year. If we assume this trend will continue and add 20 billion barrels onto a final analysis, we get a much prettier 53% of URR.

This next chart shows is constructed with a theoretical, additional 10 billion barrels of reserves added. I'll add one soon with the 20 billion barrels.




Here are excerpts from two articles and a report referencing the current situation in China. There may be conflicting forecasts/expectations of what the immediate future holds contained in them but they provide a good look at China's consumption and what is effecting it.

Back to the Future: Revisiting 1982 Auto Sales [4-page PDF]
by Jeff Rubin and Meny Grauman



World Auto Sales to Hit Record High on Soaring Demand from BRIC Countries

Despite the systemic problems facing the US auto market, the world market has seldom been better. This year should mark the seventh consecutive record for annual vehicle sales, led by continued strength in Brazil, Russia, India, China (BRIC) and the rest of the developing world. While vehicle sales in the second quarter fell a combined 7% in the United States, Canada, the European Union and Japan, they were up 20% in BRIC countries. In fact, total annual sales in these countries are expected to overtake the US next year for the first time ever.

Moreover, the very models that American motorists are shunning, motorists overseas are snapping up. SUV sales, which already make up roughly 8% of the red-hot Chinese car market, are up 40% since the beginning of the year, and demand for such vehicles is similarly strong in Russia as well. So great is the demand for SUVs in the Chinese market that General Motors plans to start shipping the Michigan-made Buick Enclave, a seven-passenger vehicle, to China. SUV demand is growing at double the rate of any other class of vehicle in the Chinese market and four times the pace of sales of fuel-efficient subcompact cars. As their own domestic auto market shrinks, American car companies better look overseas if they hope to be able to see sales growth in the future.



Asia's Oil Production Expected to Increase, Ease Stress on Global Supplies
By Patrick Barta
October 7th, 2008



China, India and other big energy users in Asia aren't about to become major oil exporters -- far from it. They still consume much more crude than they produce and that trend won't change.

But several countries, including China, are lifting oil output. The unexpected boost -- some industry analysts had said the region would struggle to maintain production levels in the current decade -- should help Asia meet more of its own demand and reduce stress on supplies for the rest of the world.

The International Energy Agency in Paris expects China, Vietnam, Malaysia and other Asian-Pacific nations to increase production by almost 300,000 barrels of oil a day in 2009, the region's biggest annual increase since at least the 1990s. When contributions from Central Asian nations such as Kazakhstan are added, the total increased production rises to about 500,000 barrels per day, analysts say. Overall, non-OPEC world production is only expected to grow about 760,000 barrels a day in 2009, the IEA says.

Asia's increased crude production is still a drop in the bucket compared to total world consumption, which is now approaching 87 million barrels a day. Moreover, many analysts believe Asian output will start falling in a few years, as big existing fields decline. Although growing at a slower pace in recent months, consumption continues to rise across the region, which means that any easing of supply pressures could be short-lived.


China's Faltering Oil Appetite
Steve Mufson
October 6th, 2008
Newsweek/WashingtonPost.com


A lot of people who forecast the future tend to draw a straight line forward from existing trends. That's why people forecast a continuation of the breakneck increases in Chinese oil consumption.

There are at least two reasons to question that. One is that the current financial crisis could hammer the U.S. economy, and cut deeply into our purchases of all kinds of stuff, including stuff that comes from China. If that happened, it's doubtful that China would keep up its double-digit economic growth in the coming months.

The other reason is more benign: China has drastically raised fuel prices, effectively slashing its subsidies for motor fuel. And we all know that when retail petroleum product prices rise sharply, we tend to use less of them. Will the Chinese be any different?

It's a question that matters to every one of us, whether a car owner or simply a consumer who buys goods that travel in trucks. That's because the challenge of meeting rising Chinese demand is expected to keep oil markets tight and prices high even if Americans buy more efficient cars.

I would think that given the relatively limited means of the average Chinese wage earner, Chinese drivers would be even more sensitive to a sharp increase in fuel prices.

And lo and behold, in August Chinese gasoline demand fell 5.6 percent, or 470,000 barrels a day, below June and 2.7 percent, or 200,000 barrels a day, below July levels.

One month is not enough to reach many conclusions, especially when that month and the months preceding it may have been distorted by stockpiling of fuel in advance of the Olympic games that took place in Beijing in August. (Ting notes that China went on an "inventory building binge" in November 2007 and that its gasoline and diesel inventories grew by 83 percent by August this year.) And the August consumption figure was still up 7.1 percent from August last year.

I would argue that higher prices will put China on a new, more gradual growth trajectory - with consumption still rising, but at a pace that should ease some of the pressure on oil markets, and prices at the pumps throughout the rest of the world.





tags: chart, China, crude oil, graph. Jeff Rubin, oil, oil demand, oil production, oil supply

235 comments:

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スタービーチ said...

スタービーチは誰にでも出逢いという奇跡をもたらしてくれる。スタビで理想の関係作りしてみませんか

井の中のカ○ズ君 said...

流行りの検索ワードの番組、井の中のカ○ズ君で紹介された在宅ホスト倶楽部っていうワードで簡単にお金稼ぎました。携帯からgoogle検索にアクセスして在宅ホスト倶楽部って検索してみてください☆男性の方なら家でいるだけで1日2万円ぐらい稼げちゃうから本当に楽ちんだよ。誰か一緒にこの仕事で盛り上がろう

モバゲー said...

モバゲーでは友達から恋愛まで、様々な出 会いを探せる無料のコミュニティサイトです。常時サポートスタッフが掲示板をチェック、サクラや業者を排除しておりますので安心してご利用いただけます

スタービーチ said...

スタービーチなら好みの女性がきっと見つかる!会員数ナンバーワンのスタビでご近所さんを探そう

スタービーチ said...

日本最大級の出会いコミュニティ「スタービーチ」で探しませんか。素敵な出会いを経験して理想の人と楽しい思い出を作りましょう

モバゲー said...

出会い専門のモバゲーSNSが誕生!メル友、恋人、セフレetc…貴方の理想に合った関係になれちゃいます。素敵な人と過ごしたいならココで見つけてみませんか

スタービーチ said...

最近スタービーチが女の子のコミュニティーサイトで話題中みたい!!夏休み目前ってのもあり登録比率に女性の数が半端ね~、やっぱり夏に一人は辛すぎや~とか思ってたら、暇な娘多すぎ・彼女簡単に出来ちゃった

スタービーチ said...

出 会いを探しているのなら会員数ナンバーワンのスタービーチ!開放的な夏休みはここで新しい出 会いを見つけよう!

モテる度チェッカー said...

夏休み目前になり、一人で大事な休みを過ごすのは誰でもイヤと違う?そんな時にモテる度チェッカーで簡単診断、この夏アナタも彼氏・彼女と過ごすための貴重なアドバイスが手に入りますよ、もうアドバイスに対しての感謝のメールが毎日!!アナタもこの夏を乗り遅れるな

グリー said...

グリー発信!!出会い専門SNS誕生、今話題のgreeから出会いをGETしよう。greeにしかできない事が盛りだくさん!!気軽にメールするだけで出会えるサイト・・・貴方の理想の異性と出会いませんか

モバゲー said...

モバゲー専門の出会い掲示板が誕生!出会いを求めている方にはオススメのサイトです。幸せな時間を過ごしたい方、淋しい思いをしたくない方はぜひご覧ください

逆援助 said...

逆援助でお金持ちになる事が可能なこの時代。セックスのテクニックさえあれば簡単に大金をゲットする事ができます

モバゲー said...

モバゲー出会い掲示板は色々な種類の出会いを扱っております。登録無料で新しい恋の始まる事は確実です

ツイッター said...

今話題沸騰中!?新感覚出会いをツイッターで体験しませんか?リアルタイムで相手が何をしてるか分かるから、理想の人かどうかが簡単に分かる。貴方の理想の人をGETしませんか

mコミュ said...

素敵な出 会 いで愛を育む♪理想の人と楽しめる関係を築きませんか?mコミュでしか味わえない幸せを掴みましょう

スタービーチ said...

スタービーチで会える!?理想の異性をGETしよう☆素敵な出会いばかりだから求めている関係も作りやすい!!貴方が求めているのはどういった恋ですか?

名言チェッカー said...

他の人が言ってる名言や格言って良い事言ってるな~とか思ってる方、名言チェッカーで今日から自分に相応しい言葉を見つけませんか!!これでどんな人にも一目置かれる存在に為れますよ

mixi said...

mixiをも凌駕する出会い率!!出会いをするならここしかない♪mixiより出会えてしまうこのサイト。一度ハマれば辞めれません。スタービーチで素敵な出会いをしちゃいましょう

モバゲー said...

モバゲーで出会いをすれば楽しい事は間違いありません。暑いからこそ出会いを楽しむべきなのです。登録無料で簡単に利用可能!

モバゲータウン said...

モバゲータウンでは恋愛から出合いまでのキッカケをつかめる無料のコミュニティサイトです。常時サポートスタッフが掲示板をチェック、サクラや業者を排除しておりますので安心してご利用いただけます

スタビ said...

スタビが今一番アツイのはご存じでしょうか?夏休みで出会いを探している娘とすぐに会えちゃうんです。登録無料でここまで出会える所は他には存在しません。今登録して良いパートナーに巡り合おう

スタービーチ said...

出会いのシーズン、夏到来!スタービーチでご近所さんと知り合っちゃおう!ひと夏の体験も女の子は求めている

モバゲー said...

モバゲーでついに出会いができる!?楽しめる出会い、求めていた出会いはココから始まる。素敵な出会いでまずは関係づくりwしていきましょう

gree said...

greeで素敵な時間を過ごしたい・・・そんな願望を叶えてくれるサイト誕生!!今までにないドキドキ感と興奮をこのグリーで楽しみましょう

スタビ said...

スタビで出会いができる!!いつでもどこでも出会いが可能なスタービーチで最高の出会いをしてみませんか

mコミュ said...

簡単な出逢いはココでできる☆素敵な出逢いをmコミュで体験していきませんか?楽しめる出逢いを経験するならここしかない!!まずはお試しを

ツイッター said...

新時代突入!ツイッターで始まる出逢い…ここでしかできない出逢いが新しい風を巻き起こす!!素敵な巡りあわせを体験していこう!

SMチェッカー said...

あなたの秘められたSM度がわかるSMチェッカー!簡単な質問に答えるだけで自分の隠された部分が分かります!みんなで試してみよう

モバゲー said...

今やモバゲーは押しも押されもせぬ人気SNS!当然出 会いを求めてる人も多い!そこで男女が出 逢えるコミュニティーが誕生!ここなら友達、恋人が簡単にできちゃいますよ

モバゲー said...

もう夏休みも終わりに近づき、この夏最後の思い出を作りたいと焦ってる方が、モバゲーのコミュニティーに書かれてましたよ!!折角なんで夏の思い出作りに協力して自分も美味しい思いをしてみるのはどうですか?大手スポンサーサイトが付いてるので全部タダですよ

グリー said...

最近はどこのSNSサイトも規制ばっかりで、ちょっと出 合いに関して書き込みするとアク禁食らうけど、夏休み終盤に差し掛かり色々なサイトを調べた結果、グリーだけはどうも規制が緩んでるみたいです。今がチャンスの時期ですよ

ツイッター said...

ツイッターで出 合 いを求めるのです。気の合う異性と交流して楽しいひと時をお過ごしください。登録無料で使えるので気軽さは100点満点!

mコミュ said...

mコミュでならご近所さんと出会える確率99%!友達や恋人を探してる人はここで見つけてみませんか

モテる度チェッカー said...

夏休みももう終わりに近づきこのまま一人は寂しいのちがう?そこでモテる度チェッカーを使い自分がなぜモテないか診断してもらいましょう。10~20代の女性アドバイザーが多数在籍してるので、アドバイスを参考に夏終盤を楽しもう

EDUCATIONAL COSULTANT said...

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