Halliburton Forms Energy Joint Venture In China

15 Comments on "Halliburton Forms Energy Joint Venture In China"

rockman on Sat, 12th Jul 2014 9:12 pm 



Now that the Chinese have gone to school on frac’ng all they needed was to cut a deal with someone with equipment to do the frac’ng. Notice below this was predicted in 2012:

President Obama, during his third debate with Romney on 22 October said, “With respect to China, China is both an adversary, but also a potential partner in the international community if it’s following the rules. So my attitude coming into office was that we are going to insist that China plays by the same rules as everybody else.”

But one item the pair apparently agree upon is that Chinese investment in most American industries is a good thing, so it should come as no surprise that on 26 October China’s Lanzhou Haimo Technologies Co. announced that its subsidiary Haimo Oil & Gas LLC will buy a 14.29-percent stake in Houston-based Carrizo Oil & Gas’s Niobrara shale oil and gas assets in Colorado for $27.5 million.

So, what is Beijing’s covertly cunning policy in making such a purchase? To suck the Rockies’ hydrocarbon resources dry and ship them to China?

Federal law is extremely complex for exports of domestically produced U.S. hydrocarbon foreign sales, and the Niobrara basin, currently produces 1,850 bpd, is hardly likely to make a dent on Chinese energy use, much less the fact that there are currently no Colorado pipelines to the U.S. western coast that could allow its transfer.

So, why buy Haimo Oil & Gas LLC? Can you say “technology transfer?” And China has embraced fracking with a vengeance. According to China’s National Development and Reform Commission, the country’s top economic planner, China is aiming to produce 6.5 billion cubic meters of shale gas by 2015, as well as investing an estimated $63-98 billion to drill 20,000 shale gas wells by 2020.

And the U.S.? Fracking is now so rampant that four of the biggest service companies, including Halliburton and Schlumberger Ltd., will see their collective third-quarter operating profit drop by more than $1 billion in North America compared to 2011, according to estimates from Houston-based Tudor Pickering Holt & Co. PacWest Consulting Partners LLC, a Houston-based industry adviser, estimates that prices charged for fracking services in 2012 are expected to drop 14 percent this year and another 8 percent in 2013.

Accordingly, Chinese interest in buying into the U.S. fracking industry must be the answer to many oil patch CEO’s prayers. And Beijing’s prayers as well, as the International Energy Agency recently reported that China, which consumed roughly 4.7 million barrels per day a mere decade ago, will end the year by importing about 9.7 million bpd, a major factor in pushing global oil prices from near $30/barrel in 2000 to 2012 prices ranging between $80 and $110.

So, fracking to the rescue. China has roughly 240 billion tons of accessible oil shale reserves, according to data developed by China’s National Energy Administration, and roughly 10 million tons of oil can be produced from these reserves annually. Accordingly, despite China-bashing being the political flavor of the month in Washington, expect the Lanzhou Haimo Technologies Co. purchase to sail through with nary a mention.

After all, to paraphrase President Eisenhower’s Secretary of Defense, former General Motors president Charles Erwin Wilson, “what was good for the country was good for General Motors and vice versa” – only in this case, its Vice President Dick Cheney’s former firm Halliburton as well as Schlumberger doing “good” for the country, who, looking at their slumping bottom line, will no doubt shortly be seeking to assist China’s Lanzhou Haimo Technologies Co. in its new acquisition.

Northwest Resident on Sat, 12th Jul 2014 9:46 pm 



rockman — What are the chances that China’s ulterior motive is to get real-time fracking experience and equipment/expertise to do it back on their own shales? Maybe their goal is to be able to frack for oil on their own one day, since they obviously don’t have a lot of the conventional oil or not even that much coal to keep some semblance of energy supply going well into the future. Just pure speculation on my part…

Makati1 on Sat, 12th Jul 2014 9:54 pm 



Northwest, you missed rockman’s point, I think. It IS to get access to fraking tech, and to copy the equipment needed back home in China. China does not expect to gain any oil from the US fraking. It is buying tech and experience, as it has done many times before.

Keep in mind that corporations are NOT patriotic. They don’t much give a damn about the country they are located in as long as it is profitable. When it is not, they move on, like locusts. Halliburton is one of the biggest and least patriotic of all.

Northwest Resident on Sat, 12th Jul 2014 10:08 pm 



Makati1 — I think I kind of got rockman’s point, just looking for a little more pointed clarification if he’s willing to offer it.

What makes you think that Halliburton is one of the “least patriotic of all” corporations?

Nony on Sat, 12th Jul 2014 10:30 pm 



China will try to get the equipment and the know how they need. They have a history of doing JVs, stealing the info and building a duplicate facility next door. Of course, oil and gas has some challenges and its easy to just turn into Haliburton. but they will try to get the info and equipment to do the job. As a last resort they do JVs…and a very last resort is direct pay for services. But they hvave always loved this industry (read the sections in Yergin’s book on China). They will try to go forward, pretty seriously.

Davy on Sun, 13th Jul 2014 7:30 am 



Folks ask China how it is going to build a vast network of pipelines for all this fracked gas. I would also like you to ask China where it is going to find the water in the parched areas where fracking has potential. No, too late for China and a vast frack gold rush like the US had. In any case do you folks not read what Short posts? Fracking is possible through CB intervention (cheap money), high oil prices, and support of the quickly depleting conventional fields (relatively cheap oil).

synapsid on Sun, 13th Jul 2014 2:39 pm 



Makati,

Is the government of the Philippines doing any planning that you know of for when oil becomes unaffordable or unavailable? Forty percent of energy comes from oil and twenty percent from coal; the country produces some of each but imports the rest.

The Philippines has the second fastest-growing economy in East Asia after China, and population keeps growing too–I’d hope there’s some thinking ahead.

I keep posting this and it keeps disappearing below the fold.

Northwest Resident on Sun, 13th Jul 2014 2:50 pm 



Davy — Excellent points. Where WILL China get the water to do the fracking?!

“China is dangerously short of water. While the south is a lush, lake-filled region, the north—which has half the population and most of the farmland—is more like a desert. The international definition of water stress is 1,000 cubic metres of usable water per person per year. The average northern Chinese has less than a fifth of that amount. China has 20% of the world’s population but only 7% of its fresh water. A former prime minister, Wen Jiabao, once said water shortages threaten “the very survival of the Chinese nation”.

The shortage is worsening because China’s water is disappearing. In the 1950s the country had 50,000 rivers with catchment areas of 100 square kilometres or more. Now the number is down to 23,000. China has lost 27,000 rivers, mostly as a result of over-exploitation by farms or factories.

Water shortages impose big costs. China is hoping for a shale-gas revolution but does not have enough water for it since most of the gas reserves are in the driest parts of the country. The World Bank puts the cost of China’s water problems—mostly damage to health—at 2.3% of a year’s GDP.

economist dot com/news/leaders/21587789-desperate-measures

rockman on Sun, 13th Jul 2014 3:17 pm 



“Halliburton is one of the biggest and least patriotic of all.”. Nope…they are just as patriotic as all other US corporations. Just as patriotic as the folks who don’t want oil pipelines built in their states or as the New England folks who don’t want wind turbines built off their coast line. LOL.

China has a well honed process when it comes to duplicating technology: hire companies with the equipment and experience. Then have their employees get OTJ experience while they also study the equipment design. There isn’t one piece of drilling/frac’ng equipment the Chinese can’t build cheaper. And if you think it’s easy for the Chinese to hack software half way around the world imagine what they can do when the computer is sitting on their drill site. Copyright problem? Nope…the Chinese can just use the tech domestically and not export. No one can prove what equipment they would be using because no one has the right to inspect any of it.

Water problems? No problem at all: the gov’t just takes it from the folks currently using it for whatever. In China the water belongs to the gov’t…not the people. The water will go where the gov’t gets the best benefit.

And the Chinese can’t afford to build out the pipeline system? First, the Chinese can make pipe and lay it heaper then anyone else. They also current spend for than $400 billion worth of energy per year. And they are sitting $3+ TRILLION in foreign currency reserves. And, of course, there’s that deal they just cut to buy hundreds of $billions of Russian NG.

I’m pretty sure they can scape the funds together to gather the NG from those potential shale reservoirs.

Davy on Sun, 13th Jul 2014 3:29 pm 



Rock, sure , if status quo BAU continues. Are you going to put your money on that? I disagree with Chinese water issues mentioned. They have been taking from others for years. There is no more to take unless you want to cut the meat and bone. They took the fat already. Nope, Rock, China is a very short time away from a day of reckoning on multiple fronts. One day you will wake up and the story is going to be all about China in Crisis. Sure today fits your description.

Northwest Resident on Sun, 13th Jul 2014 5:01 pm 



China has lost more than half its rivers mostly as a result of over-exploitation by farms or factories. No problem. Just cut the population in half to balance the score and they’re back in business. Not like that haven’t used that trick before.

Makati1 on Sun, 13th Jul 2014 8:12 pm 



synapsyd, I reply thus:

“The Philippines has large reserves of many natural resources; chief among these are oil, natural gas and coal. Other sources of energy that can be harnessed include geothermal energy and hydroelectricity. The country’s slow rate of exploitation of these natural resources ensures that they will be available for generations to come.”

Read more : http://www.ehow.com/list_6820979_energy-sources-philippines.html

“…Specifically in Asia, Platts noted that Asian gasoline market remained bullish as the product continued to inch higher this week on fresh demand from India. There was also some prompt demand from Vietnam, Thailand and the Philippines that was tightening the overall demandsupply balance in the market at a time when Singapore onshore stockpiles of light distillates is at its lowest this year.

On the other hand, heavy supplies continued to weigh down the Asian gasoil/diesel market amid lackluster demand. Demand from Saudi Arabia and other countries in the Middle East also remain sluggish, and contributed to the weakness in the Asian markets….”

https://www.doe.gov.ph/oil-price-monitoring/2422-oil-monitor-as-of-08-july-2014

I don’t see the Ps being in any worse shape than the US as far as hydrocarbons go. I think prices can go a lot higher before it causes any pain. As the Ps only uses ~400,000 bbl/day for it’s 95 million people … and the US uses 17,000,000+ bbl/day for it’s 310 million people, you can see the difference in ‘need’. There are still a lot of room for ‘renewable energy’ here. Solar systems are becoming more and more widespread as stand-alone on homes. Few Filipinos own anything requiring oil or gas fuels so they will not be missed.

I can assure you that there is future planning here. Maybe even more than in the US. Being composed of 7,000+ islands, of which about 2,000 are inhabited, the Ps have a totally different energy system from most countries.

https://www.doe.gov.ph/

synapsid on Mon, 14th Jul 2014 12:34 am 



Makati,

I hope so–I have lots of Filipino friends here and they all have close family connections in the islands. I’d be happy to see the country not simply follow the trajectory of the rest of SE Asia into increasing dependence on coal and oil, especially coal.

steve on Mon, 14th Jul 2014 7:21 pm 



Davy you are right on that note about China…the story is always missed on them for some reason 6 years ago it was how the were going to decouple from the U.S and the rest of the world…make their own weather so to speak….this is a quote from Automatic Earth “Or that Beijing has already blown a $25 trillion credit air balloon in just the past few years, and the shadow banks blew their own bubble straight on top of that. Nice on the way up, but nothing goes up forever. And things that are leveraged to the hilt, as in the entire Chinese economy, tend to fall of that hilt at a very rapid clip.”

If that does not scare you… you are dead or not paying attention.

Davy on Mon, 14th Jul 2014 8:41 pm 



Steve, glad others here realize the danger China’s bubble economy poses to the world. All I ever here is how bad the US is. I have to dewell on Asia more than I like to balance conversation here.