China and the Global Energy Crisis

China and the Global Energy Crisis

Development and Prospects for China’s Oil and Natural Gas

Tatsu Kambara and Christopher Howe

This book examines China’s record of oil and gas development, its refining capacity, and energy prospects. The authors conclude that there are no fundamental reasons for anxiety about China’s demands on the world energy economy, but they emphasize that its energy future will depend critically on a continuation of reform and internationalization. China and the Global Energy Crisis is a concise but detailed study of these issues.

Chapter 2: The Geological Basis of the Onshore Oil and Gas Industry

Tatsu Kambara and Christopher Howe

Subjects: asian studies, asian development, asian economics, asian innovation and technology, asian politics and policy, development studies, asian development, economics and finance, asian economics, energy economics, environmental economics, environment, asian environment, environmental economics, innovation and technology, asian innovation, politics and public policy, asian politics


In order to evaluate the past and to understand the present issues in China’s oil and gas industry, we need to consider in more depth the resources nature has given China on which to base this industry. As China moves from an oil surplus to oil deficit economy, with all the economic and strategic implications of this change, this issue becomes pressing. It is important to know whether present problems reflect short-term difficulties or whether they reflect a fundamental shortfall in the raw energy resources available for Chinese development. THE NATURE OF OIL AND GAS RESERVES Estimation of oil and gas reserves is a complicated matter. Such reserves are a complex of hydrocarbons which may manifest themselves in a variety of forms and mixtures. Typical crude oil fields are a mixture of oil, gas and water, often held within porous rocks. If structures with permeable or porous rock extend to the surface, then leakage and loss will occur, and the reserves will not be contained. The best oil fields are, therefore, hydrocarbon-bearing formations that are themselves contained in nonpermeable rock formations. Such oil fields are thousands of metres deep, at which point there is the ideal combination of oil- and gas-impregnated materials bounded in caverns of impermeable materials. Since gas is lighter than oil, and oil lighter than water, on drilling one typically finds first gas, followed by oil and then water. Initial prospecting therefore usually begins with the identification of places where the desired...

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