Tags: China | oil | reserves | production

China's Resources Point to Low Oil Prices for Years

By    |   Wednesday, 17 December 2014 08:11 AM

Shale oil production is being blamed for this year's collapse in oil prices. Technology created the boom in shale production and technology is likely to adapt to the low-price environment. Advances in technology could also open the next frontiers in shale oil.

Shale oil reserves exist around the world. In China, the reserves are estimated to be about as large as the reserves available in the U.S. and Canada combined. When those reserves can be accessed, China's import needs should drop and the price of oil could crash again.

For now, there are a number of challenges to drilling in China. The reserves are deep. In the United States, shale reserves are generally located less than 10,000 feet underground. In China, reserves are 10,000 to more than 25,000 feet below the surface. China's reserves are also largely in mountainous terrains that make drilling and transport more difficult.

For now, China's shale oil production is small. But the country would benefit from production and it's important to remember that China holds not just large reserves of oil but also the largest reserve of U.S. dollars outside of the United States. The central government could finance large-scale production efforts at almost any price and derive at least employment benefits for the country.

The incredible size of China's oil reserves makes the challenges attractive to those seeking large profits. The country is in a position to fund research and production. These factors contribute to a long-term bearish outlook for oil.

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Shale oil production is being blamed for this year's collapse in oil prices. Technology created the boom in shale production and technology is likely to adapt to the low-price environment. Advances in technology could also open the next frontiers in shale oil.
China, oil, reserves, production
247
2014-11-17
Wednesday, 17 December 2014 08:11 AM
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