China, the world’s biggest maker of solar panels, EVs, and wind turbines, has built the world’s largest offshore oil platform that will be used at the Marjan field in Saudi Arabia.
The structure, according to Chinese media, represents a breakthrough in the country’s development of large-scale offshore energy infrastructure. It also signals that there is enough demand for oil to motivate the investment in such a massive structure.
Indeed, the parameters of the platform are impressive. At 24 stories high, the platform weighs over 17,000 tons, has a deck the size of 15 basketball courts, and has an annual capacity for 24 million tons of crude oil, which is about 176 million barrels, and 7.4 billion cubic meters of natural gas.
The platform will now travel to Saudi Arabia where it will be installed at the Marjan field, which is currently undergoing an expansion aimed at boosting production. The program will cost $12 billion and add 300,000 barrels daily to the field’s capacity, bringing the total to 800,000 bpd. It would also add another 360,000 bpd in ethane and natural gas liquids production. The gas production capacity of the field is set to rise by 2.5 billion cu ft per day.
All this is happening while the International Energy Agency forecasts peak oil demand before 2030. It seems that with or without that peak, there will be plenty of demand for new production capacity, even as Saudi Arabia canceled its broader production capacity expansion program amid falling oil prices.
The completion of the Chinese mega platform also coincided with another breakthrough, this time from Chevron. The company announced last week it had successfully tested a new high-pressure extraction technology at a deepwater well in the Gulf of Mexico. The success of the technology means more resources could become recoverable.
“The Anchor project represents a breakthrough for the energy industry,” a senior Chevron executive said. “Application of this industry-first deepwater technology allows us to unlock previously difficult-to-access resources and will enable similar deepwater high-pressure developments for the industry.”
Energy analyst David Blackmon commented on the news in an opinion piece for The Telegraph, noting that the two stories—the Chinese platform and the Chevron technology—were evidence that offshore drilling was in full swing again, undermining predictions that the energy transition was slowly killing the oil industry.
Meanwhile, the International Energy Agency issued its new monthly oil report, keeping its forecast for oil demand growth at less than 1 million barrels daily both for this year and next. Yet investments such as the Marjan platform and the Chevron high-pressure technology are not of the short-term variety. These are investments betting on the sustained long-term demand for hydrocarbons. And it looks like a certain bet—even if growth peaks in less than 10 years.
The biggest killer of oil demand, according to all forecasts, would be the electrification of transport. This electrification is faster and more ambitious in China. And yet, while EV sales rise, China is working to boost its domestic oil production to reduce its reliance on imports. Incidentally, the rise in EV sales includes a massive jump in hybrid sales, which added 70% in the first seven months of the year.
Oil demand is very far from dying, and news such as the completion of the Marjan platform and Chevron’s high-pressure extraction technology is hard proof of that. However much governments spend on transition technology, it is the market that ultimately decides what energy source will live and what will die. For now, it looks like oil and gas are quite healthy, even with the state-sponsored proliferation of alternatives such as wind, solar, and EVs.
By Irina Slav for Oilprice.com