Heavy oil to help lighten energy load

By Wang Yu (China Daily)
Updated: 2006-11-14 06:47

Oil producers will give priority to heavy oil exploration and production in the next decade to meet China's increasing energy needs.

"As prices for conventional oil products will remain high in the long run, heavy oil and alternative oil products will unavoidably become part of our energy segment in the near future," Zhang Fengjiu, deputy chief engineer of China National Offshore Oil Company (CNOOC), told China Daily Monday at the first World Heavy Oil Conference.

Heavy oil a catch-all name for oil shale, oil sand and natural asphalt and natural gas hydrate are becoming increasingly important substitutes for conventional energy resources worldwide.

Zhang said that heavy oil production will hold a dominant position in his firm's business. "By 2010, the daily production of heavy oil will surge to 500,000 barrels from the current 200,000," Zhang said, adding that heavy oil will account for 60 per cent of CNOOC's total production then.

Jia Chengzao, vice-president of PetroChina, said his company is also interested in tapping heavy oil resources. But he said it is still too early to make any announcement.

As the cost of heavy oil exploration and production is high, Jia called for more government policy support.

Bob Lockwood, president and chief executive officer of Cambridge Energy Research Associates, based near Boston, Massachusetts, said China National Petroleum Corporation (CNPC), PetroChina's parent company, is also targeting global heavy oil resources by working closely with his organization.

"We have hammered out a memorandum of understanding (MOU) with CNPC, mainly studying options of bringing more heavy oil resources from Canada to China," Lockwood said. "I believe the MOU can expand beyond that scope to joint research on technology innovation and investment options."

CNPC and the government of the Canadian province of Alberta initiated the four-day global heavy oil conference, which opened on Sunday. Canada is rich in heavy oil.

Ma Kai, head of the National Development and Reform Commission, said at the opening of the conference: "The government should encourage and support the development of heavy oil, in line with its 11th Five-Year Plan (2006-10)."

Unconventional forms of oil and gas, such as heavy oil, are important to China's energy industry, according to the 11th Five-Year Plan. Currently, heavy oil accounts for 20 per cent of China's total oil reserves, said Ma, the top economic planner.

Heavy oil is defined as the fuel oils that remain after the lighter oils have been distilled off during the refining process. It is highly viscous and basically would not travel in its natural state; heat or dilution would be needed to move it.

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