Abstract
Natural gas has an increasing role in Chinese energy transformation. We present a system dynamics model of the natural gas industry in China. A new system dynamics model for natural gas companies based on reserve exploration and well construction as well as investment dynamics is proposed. The contribution of the paper is to analyze the influence of technology, investment and policy factors on the natural gas industry. We found that the dynamics of the main variables, including gas policy, cost of investment, accounting depreciation and exploitation technology, are sensitive to the sustainable development of resources. The simulations and results presented here will be helpful for government to reform policies, and for upstream companies to make decisions.
Highlights
As a coal-dominated energy-consumption structured economy, China has been suffering from serious pollution problems
This part is going to examine how the model explains the basic features of gas exploitation and exploration in China
The error between the simulation value and historical data vary from 1% to 8%, indicating that the model could be used for analysis in the case of the natural gas system
Summary
As a coal-dominated energy-consumption structured economy, China has been suffering from serious pollution problems. China’s current technology and market development of renewable energy is lagging, China is vigorously promoting the exploration and development of natural gas. For a country as large as China in terms of market structure, competition and regulation reform, any analysis of natural gas market development needs to capture its industrial variations. It is very important to analyze corresponding measures and incentives, such as policy, technology, and regulation factors to reduce the production cost and improve investment efficiency. The national oil companies (NOCs) have increased their investment in exploration and development of upstream sector in order to meet increasing natural gas demands. Since the mid-2000s, the Chinese government has hoped that NOCs will eventually rival the operation of major Western oil companies in the scope of their worldwide activities, which could promote the market evolution, leading to greater investment from private entrants.
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