President Xi’s cabinet has released a package of policies for a green home and sustainable development, including three-year and five-year action plans on cutting industrial overcapacity and alleviating environment pollution by phasing out coal and other polluting fossil fuels and replacing them with cleaner energies, such as solar energy, natural gas. Driven by such national policies, demand for natural gas at home is surging.

In the period of 2010 to 2018, 80% percent of China’s Liquefied Natural Gas (LNG) is imported from Australia, Qatar, Malaysia and Indonesia. In 2017, oil trade between China and US was worth $4.4 billion. US oil output to China was thought to be beneficial to both side in offering a way to cut US trade deficit and a channel to meet China’s energy demands. In 2017, trade gap between US and China was about $ 375 billion, and LNG trade volume registered $644 million. This could serve as a foundation for furtherance of bilateral trade in the long run. However, due to the escalation from trade fractions into an official trade war finalized when US slapped tariffs on $34 billion worth of Chinese goods took effect on July 6, we don’t have many good reasons to believe oil and gas would play their part in Sino-US trade as expected.

china LNG - China Facilitates Self-supporting Alternatives to Meet Domestic Energy Demand

Also Read: China May Experience Larger Seasonal Swings in LNG Prices

As a matter of fact, China itself has rich gas reserves to tap. South China Sea has one-third of high-temperature (as high as 249 degrees Celsius) and high pressure (pressure coefficient as high as 2.38, equivalent to placing a weight of 125,000 tons on a surface of 1m2) gas fields, which has nearly 15 metric trillion tons of natural gas. Gas production from this field can help meet demands of provinces in South China, Hong Kong and Macao SARs.

Photo Source/Xinhua

In Sept. 2014, the drilling rig CNOOC 981 owned by China National Offshore Oil Corporation, the country’s largest offshore oil and gas producer discovered a gas field in South China Sea, later named Lingshui 17-2 gas field. It is China’s first self-supporting deep-water gas field and has a certified proven reserves of gas of more than 100 billion m3. The operational depth of the field is on average 1,500m below the sea surface. This territory is known to have high winds and low temperatures, and moisture caused by storms and mist by high winds add to the extremely demanding natural conditions for exploration. The company confirmed that, it has good knowledge of technologies for the design, construction and installation of production platforms used for producing gas in such specific harsh environment. Construction of this gas field has already began. What’s worth mentioning is that CNOOC 981 boasts operability in nearly 70% of deep-water gas fields in the world.

Aside from efficient production, supporting links also need efforts and investment, say, transportation and storage, as demand and consumption may vary in seasons, high summer and the depth of winter will reasonably see peak demands when massive cooling and systematic heating happen.

 

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