Priority will be given to heavy oil exploration and production in the next 10 years to meet China's increasing energy demands.

 

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

 

Heavy oil -- a catch-all name for oil shale and sand and natural asphalt -- and natural gas hydrate are becoming increasingly important substitutes for conventional energy resources worldwide. It's defined as the fuel oils that remain after the lighter oils have been distilled during the refining process. It's highly viscous and wouldn't travel in its natural state with heat or dilution required to transport it.

 

Zhang said heavy oil production would 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 200,000 currently," Zhang explained. Heavy oil will account for 60 percent of CNOOC's total production by that time.

 

Jia Chengzao, vice president of PetroChina, said his company was also interested in tapping heavy oil resources. But he said it was 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 for 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 that opened on Sunday. Canada is rich in the resource.

 

New policies will be formulated to encourage the exploitation of unconventional oil and gas resources to ease China's energy shortages, Ma Kai, minister of the National Development and Reform Commission (NDRC), said yesterday.

 

Unconventional energy sources such as heavy oil were important to China's energy industry, according to the 11th Five-Year Plan (2006-10). Currently heavy oil accounts for 20 percent of China's total oil reserves, said Ma.

 

China boasts abundant heavy oil resources and "has discovered a total of 70 heavy oil fields in 12 basins after 50 years of exploration," said Zhao Xianliang, an official with the Ministry of Land and Resources (MLR). 

 

Traditionally the NDRC and MLR only evaluated oil and natural gas as energy resources but this year, for the first time, they'll also assess coal-bed methane, oil shale and sand.

 

The latest evaluation round covered 47 basins that have coal-bed methane, 80 oil shale mines and 24 oil sand basins.

 

(China Daily, Xinhua News Agency November 14, 2006)