Petrochemical
Luozigou Oil Shale Refining and Comprehensive Utilization Project of Yanbian Prefecture
1. Introduction to the Project
1.1 Project background
1.1.1 Introduction to the Project
Oil shale is classified as petroleum in the petroleum industry according to its definition. Petroleum is a complex mixture composed of hydrocarbons, which includes gases (natural gas), liquids (crude oil), and solids (excluding coal). Shale oil is an emerging oil and gas resource, and the market demand for shale oil is constantly increasing due to factors such as the continuous growth of global energy demand and the reduction of traditional oil reserves. This project is located in Luozigou Town, Wangqing County. It is a comprehensive utilization project that integrates oil shale ore mining, oil refining, power generation, waste residue brick making and other building materials projects.
1.1.2 Market prospect
(1) The scale and production capacity of rock oil extraction in China continue to expand
Oil, known as the “blood of industry,” has always been an important driving force for global economic development. However, as traditional oil reserves continue to decrease, a new oil resource is quietly emerging, which is shale oil. Shale oil is a petroleum resource stored in shale, in layman’s terms, it refers to petroleum stored in rock fractures. To extract it, pressure is applied to the shale containing oil, and water and additives are used to expand the cracks in the shale to release the oil. Due to its deep burial depth and low permeability, shale oil extraction is very difficult, like squeezing oil from a whetstone.
However, the market demand for shale oil is constantly increasing due to the increasing global demand for oil and the reduction of traditional oil resources. At present, shale oil has been discovered in 75 basins in 21 countries worldwide, with the United States being the largest shale oil producer, accounting for 35% of the world’s total shale oil production. China has abundant shale oil resources and ranks third in the world in terms of recoverable reserves.
In recent years, the scale and production capacity of rock oil extraction in China have been continuously expanding through continuous technological breakthroughs and iterative upgrades. China’s shale oil has reported 1.69 billion tons of proven reserves, with a cumulative tertiary reserve of more than 6 billion tons. Major breakthroughs have been made in Qingshankou Formation in Songliao Basin, Lucaogou Formation in the Junggar Basin, Shahejie Formation in Bohai Bay Basin, and the second member of Fubei Basin. Three national shale oil demonstration areas, Jimsar, Daqing Gulong, and Shengli Jiyang, have achieved good exploration and development results, and the pace of shale oil construction and production throughout the country has been accelerating. In 2023, the national shale oil production reached 4.584 million tons, a record high. Shale oil and gas, as representatives of unconventional oil and gas, have become one of the most strategic alternative energy sources in China, and their position in the country’s energy landscape is becoming increasingly important.
(2) Conditions for shale oil extraction in China
China’s shale oil resources are mainly concentrated in three regions: Jilin, Daqing, and Northwest China. At present, the areas in China where shale oil reservoirs have been discovered include Junggar, Santanghu, Ordos, Sichuan, Nanyang, Jianghan, Bohai Bay, Subei, Songliao basins, etc. Compared with the marine sedimentation of shale oil in the United States, shale oil in China is mainly deposited in lacustrine facies, resulting in poor physical properties, low maturity, and exploration potential of terrestrial shale oil reservoirs compared with North America, etc. However, the advantage is that the damage intensity is relatively weak, the thickness of mudstone sedimentation is large, the sealing conditions are good, and the salt rock is well developed. The distribution of overpressure zones is diverse, which makes it easy to form shale fractured oil and gas reservoirs, and shale oil can be accumulated and preserved.
In recent years, the country has frequently introduced relevant policies to promote the growth of domestic oil and gas industry production capacity. In 2019, the National Energy Administration organized a conference call to vigorously enhance oil and gas exploration and development efforts, requiring oil companies to fulfill their main responsibilities for increasing reserves and production, and fully complete the work requirements of the 2019-2025 “Seven-Year Action Plan”. This has significant guiding significance for the development of the domestic energy industry. Starting from May 1, 2020, China will fully open up its oil and gas exploration and exploitation market. Any domestic or foreign company registered within China with net assets of no less than 300 million yuan is eligible to obtain oil and gas mining rights according to regulations. This will undoubtedly enhance the marketization level of the domestic upstream oil exploration market, and more private and foreign capital will enter the oil exploration and extraction market.
（3）Market prospects for comprehensive utilization and development of oil shale
China has abundant oil shale resources. With the shortage and tension of oil, as well as the situation of “more coal, less oil, and less gas” in China’s energy structure, ensuring the steady and rapid development of China’s economy and national energy security, oil shale development is imperative. However, a key issue that constrains the development of oil shale is the treatment of waste residue after oil extraction (including gangue during oil shale mining), involving both environmental issues and the comprehensive economic benefits of oil shale development.
Oil shale contains a large amount of minerals, so the amount of shale ash produced by combustion or dry distillation is large, accounting for almost 60-80% of the oil shale processing capacity. The large amount of minerals (ash) is a major characteristic of oil shale. In the process of development and utilization, if the ash is not utilized, it will inevitably become an obstacle to the development of the industry. If ash and slag are utilized as resources, it can not only increase the economic benefits of enterprises, but also reduce environmental pollution, achieving a win-win situation for both economic and environmental benefits.
In recent years, the oil shale refining industry has experienced significant growth and will continue to maintain this growth trend during 2020- 2024. During this period, with the advancement of technology and the improvement of environmental protection requirements, the production efficiency and product quality of oil shale refining have been significantly improved. Meanwhile, the government’s support policies for new energy also provide strong support for the development of this industry.
Specifically, the actual growth of oil shale refining is mainly reflected in the increase of production capacity and the expansion of market share during 2020- 2024. With the continuous advancement of technology, the efficiency of oil shale mining and extraction has gradually improved, enabling more oil shale resources to be effectively utilized. Furthermore, with the increasing attention of the country to the new energy industry, the oil shale refining industry has also received more policy support and capital investment, further promoting the development of the industry.
Looking ahead, it is expected that the oil shale refining industry will continue to maintain stable growth until 2030. On the one hand, with the continuous growth of global energy demand and the increasing depletion of traditional energy resources, the market demand for oil shale as an important alternative energy source will continue to expand. On the other hand, with the improvement of environmental awareness and the strengthening of environmental policies, the oil shale refining industry will also pay more attention to environmental protection and sustainable development, promoting the industry to develop towards a greener and low-carbon direction. Therefore, the oil shale refining industry has broad development prospects in the future, with enormous market potential and development space.
In the future, with the advancement of technology and strong support from national policies, the development and utilization of oil shale in China will usher in new opportunities. The issues of increasing recovery rate, reducing production costs, and minimizing environmental pollution will be effectively addressed. With the continuous expansion of the market size, the oil shale industry will gradually achieve large-scale and specialized development. In the process of R&D, attention should be paid to the cross integration with other fields such as new energy, environmental protection, etc., to promote the sustainable development of the oil shale industry.
1.1.3 Advantageous conditions of project construction
(1) Policy advantages
The National Development and Reform Commission has released the 14th Five-Year Plan for the Development of Circular Economy (hereinafter referred to as the “Plan”). The Plan proposes to actively expand the scale of unconventional resource exploration and development, and accelerate the development of shale oil, shale gas, and coalbed methane. 2024 is a transitional period for energy transformation. Against the backdrop of ensuring oil and gas supply security, “increasing reserves and production” remains the main theme and hard task of production and operation activities for major oil and gas field enterprises in China.
(2) Location advantages
Wangqing County has obvious geographical advantages and developed transportation. Wangqing is located in the eastern part of Jilin Province and the northeastern part of Yanbian Korean Autonomous Prefecture. The entire area is 108 km long from north to south and 152 km long from east to west. Wangqing County is adjacent to the Northeast Asia Economic and Trade Zone, adjacent to the open cities of Suifenhe, Hunchun, and Tumen in China, and faces eight ports including Suifenhe, Changlingzi, Shatuozi, Tumen, Sanhe, Nanping, and Shuangshuifeng. The area is 9,016 k ㎡, making it the second largest county in the province.
Jilin Wangqing Economic Development Zone is located in the northeast of Yanbian Prefecture, at the intersection of the Changjitu Development and Opening Pilot Zone and the Harbin Mudanjiang Suidong Economic Belt in Heilongjiang Province. It is 77 km away from the prefecture of Yanji, 55 km away from Tumen Port, and 121 km away from Hunchun Port.
(3) Advantages of Investment Services
Wangqing Economic Development Zone has achieved significant results in attracting investment. Eight new projects have been launched with a total investment of 830 million yuan, injecting strong impetus into the local economic development. Meanwhile, 10 key investment and negotiation projects are actively being promoted, with an expected total investment of 1.52 billion yuan, demonstrating the strong development momentum and huge investment potential of Wangqing Economic Development Zone.
Wangqing Economic Development Zone will continue to adhere to the investment promotion strategy of “paying equal attention to both visiting and inviting”, continuously expand investment channels, and strengthen cooperation and exchanges with domestic and foreign enterprises and institutions. Meanwhile, further optimize the business environment, improve service quality, and provide investors with more convenient, efficient, and high-quality services. Through continuous efforts, Wangqing Economic Development Zone will attract more high-quality enterprises and projects to settle down, promoting the local economy to achieve high-quality development.
(4) Industrial advantages
The Luozigou Oil Shale Park is located in the western part of Luozigou Town, Wangqing County, northeastern Jilin Province. The total area of the Park is 115㎡, with a total reserve of over 3 billion tons and a proven reserve of 450 million tons, with an average oil production rate of 7.4%. The project can rely on Wangqing Longteng Energy Development Co., Ltd., which adopts the latest mining and processing technology and mainly engages in oil shale mining, refining, power generation and other projects. The oil shale project in Luozigou area of Wangqing Longteng Energy Co., Ltd. can generate 1.5 million tons of oil shale waste annually, so the raw materials are abundant. The main components of the waste are SiO2, Fe2O3, Al2O3, CaO, MgO, K2O, Na2O, SO3, etc.
1.2 Contents and scale of project construction
The project covers an area of 10,000 ㎡and has built six mines with an annual mining capacity of 2.5 million tons, an annual shale oil production capacity of 70,000 tons, a self-owned power station with an installed capacity of 6,000 kW·h, a standard sintered brick plant with an annual output of 60 million tons, a grinding station with an annual processing capacity of 300,000 tons, and a railway shipping system for product export.
The production flow of gasoline and diesel mainly includes refining in refineries, consuming a portion through the power generation process of self-owned power plants, and exporting the remaining gasoline and diesel products for sale to surrounding areas and further markets. Where, the annual refining capacity of 70,000 tons ensures a stable supply of gasoline and diesel, and some products are also used to meet local industrial and civilian needs. The rest are distributed to domestic and foreign markets through logistics channels, achieving maximum resource utilization and economic benefits improvement.
1.3 Total investment of the project and capital raising
The total investment of the project is 100 million yuan, including the construction investment of 80 million yuan.
1.4 Financial analysis and social evaluation
1.4.1 Main financial indexes
After the project reaches the production capacity, its annual sales revenue will be 54.1 million yuan, its profit will be 17.85 million yuan, its investment payback period will be 7.6 years (after the tax, including the construction period of 2 years) and its return on investment will be 17.8%.
Note: “10 thousand yuan” in the table is in RMB
1.4.2 Social evaluation
The comprehensive development and utilization of oil shale can bring significant economic benefits. On the one hand, by converting oil shale into fuel energy and chemical raw materials, it can meet the energy demand at home and abroad, and improve the country’s energy self-sufficiency. On the other hand, the development and utilization of oil shale can drive the development of related industries, increase employment opportunities and tax revenue.
1.5 Cooperative way
Sole proprietorship, joint venture and cooperation.
1.6 What to be invested by the foreign party
Funds, other ways can be discussed in person.
1.7 Construction site of the project
Jilin Wangqing Economic Development Zone
1.8 Progress of the project
The project proposal has been prepared
2. Introduction to the Partner
2.1 Basic information of unit
Name: Jilin Wangqing Economic Development Zone (formerly Wangqing Industrial Concentration Zone) Management Committee
Address: No. 435-2 Binhe North Street, Wangqing County
2.2 Overview of unit
Jilin Wangqing Economic Development Zone is located in the northeast of Yanbian Prefecture, at the intersection of the Changjitu Development and Opening Pilot Zone and the Harbin Mudanjiang Suidong Economic Belt in Heilongjiang Province. It is 77 km away from the prefecture of Yanji, 55 km away from Tumen Port, and 121 km away from Hunchun Port. The development zone was formerly known as Wangqing County Industrial Concentration Zone. It was approved by the provincial government in November 2005, with a planned land area of 3.22 km2. In 2016, the Park entered the national development zone list. On December 23, 2022, it was upgraded to Jilin Wangqing Economic Development Zone with the approval of the provincial government.
At present, there are 153 enterprises settled in the Park, including 12 industrial enterprises above designated size. In 2022, Wangqing Economic Development Zone will achieve a total industrial output value of 1.68 billion yuan, added value of 602 million yuan, tax revenue of 149-million-yuan, fixed assets investment of 872 million yuan, and total import and export of 112 million yuan. In 2022, it ranked 25th in the comprehensive ranking of 72 provincial development zones in the province, with comprehensive strength ranking in the middle and upper reaches.
Since its establishment, the development zone has adhered to the coordinated development of economy, resources, and ecology. After years of layout, it has initially formed an ecological agricultural product processing industry represented by Haoji Food, Zhongnong Industry, and Beiyihe; The edible mushroom processing industry represented by Fussen Biotechnology and Beier Technology; The pharmaceutical and healthcare industry represented by Zhengshengkang Biotechnology, Likang Pharmaceutical, and Huahui Biotechnology; The clean energy circular economy industry represented by Kaidi Electric Power, Jingyu Biotechnology, and Green Power Technology. During the 14th Five-Year Plan period, we will focus on cultivating four leading industries: agricultural product processing industry, big health industry, clean energy industry, and advanced manufacturing industry.
2.3 Contact method
Contact unit: Wangqing County Bureau of Industry and Information Technology
Contact: An Baoping
Tel: +86-13353256555
Contact method of the city (prefecture) where the project is located:
Contact unit: Yanbian Prefecture Commerce Bureau
Contact person: Li Jingyu
Tel: +86-13596515933