China's ability to process large volumes of heavy crude oil from Canada's oil sands is limited. Xingyi Wang, vice-president of China National Petroleum Corp. America Ltd., made this remark July 25 while addressing China's plans regarding heavy oil at the Oil Sands & Heavy Oil Technologies conference in Calgary. China plans to develop coking refineries to process greater amounts of heavy crude oil, but will do so at a deliberate pace and primarily by upgrades to existing facilities, Wang said.
China produces 300,000 b/d of heavy oil domestically, making up 5% of total refinery feedstock in the country, Wang said. Only 15% of Chinese refineries have coking capacity, most of which is dedicated to metallurgical coke production. This limits the country's ability to absorb potential exports of heavy oil from Canada to "a few hundred thousand barrels per day," Wang explained. "We cannot process 2-4 million b/d," he continued, referencing Canadian production.
At the same time, however, China is focused on expanding this capacity. Wang said it is difficult for CNPC, as a latecomer to oil and gas production, to compete for conventional resources. He also noted the relatively abundant untapped reserves of heavy crude and China's higher demand for diesel fuel than gasoline in explaining China's desire to expand heavy crude processing capacity.
Wang said CNPC would continue to partner with both domestic and overseas companies as its use of heavy oil grows, but cautioned that the capitally intensive nature of building coking capacity would require a measured approach. He noted a greenfield coking refinery in the design stage for construction in Guangzhou, capitalizing on the fact that 70% of China's heavy oil lies in the southern part of the country, but said most coking would be achieved via upgrade to existing plants.
China has a targeted annual growth rate for petroleum product consumption of 8%, but this has recently been closer to 10-12%, Wang said. The higher demand for diesel has led excess gasoline to be cracked into propane of butane for use as a petrochemical feedstock. China builds 200,000 b/d of new refining capacity every 18 months, according to Wang.
