November 25,2009

Pipeline Investment Surge to Address China's Gas Shortage

By CSC staff, Shanghai

A blizzard in northern China and early plunge in temperatures this winter has dropped

China into a nationwide gas shortage. At the same time, China is stepping up construction of a domestic gas pipeline network, and the third line of its West-to-East Gas Transmission Project has been identified.


In the recent "2009 Forum on China's Natural Gas Supply and Demand and City Gas Development," Wang Bin, deputy chief economist of PetroChina Natural Gas & Pipeline Company, said the third West-to-East Gas Transmission Project line has been preliminarily determined with gas transmission capacity of 30 billion cubic meters/year. At present, the west line of the project (from Horgos in Xinjiang to Zhongwei in Ningxia) is under construction and expected to go into operation in 2012, while the east line (from Zhongwei in Ningxia to Shaoguan in Guangdong) is expected to be finished by the end of 2014.


The third line of the gas transmission project, a trunk of the network under construction, will provide continuous flow from Central Asia supplying eight provinces and autonomous regions. According to the plan, 17 natural gas projects, including the fourth line of the West-to-East Gas Transmission Project, the China-Myanmar pipeline, and the third line of the Shaanxi-Beijing gas transmission project, will be completed and in production by 2015. The government hopes that the "Internet Age" for natural gas will arrive and gas shortage will be a thing of the past.

The trunk pipeline starts from Horgos in Xinjiang and will end in Shaoguan of Guangdong Province. It will wind along the second line (from Horgos to Xi'an), passing through a total of eight provinces and autonomous regions: Xinjiang, Gansu, Ningxia, Shaanxi, Henan, Hubei, Hunan, and Guangdong.


The third line of the gas transmission project will consist of a trunk and a branch line, with a total length of 4661 km. The trunk pipeline will be 4595 km, in parallel with the second line for about 3000 km. The branch line will start from Jingmen and end in Duan Yun Ying, a length of 66 km. The gas capacity of the trunkline will be 30 billion cubic meters/year, with a pressure of 10~12 MPa, and the diameter of 1219 millimeters, the same parameters as the first line of west-east gas project.


As with the second line, Central Asia is the source of the third line. Turkmenistan, Kazakhstan and Uzbekistan and other countries look to increase their gas supply to China, relying on natural gas to promote economic and social development while trying to get out from under Russia's economic control by actively seeking cooperation with China.


Central Asian gas supply is an important guarantee for the construction of the third line. During the construction of the second line, China National Petroleum Corporation (CNPC) reserved the third line's route. The first, second and third line all pass through the Hexi Corridor and use Zhongwei in Ningxia as a transfer station. The third line is being built independently by CNPC.


Xie Dan, deputy general manager of Sinopec, says China's natural gas pipeline network at present runs at a total length of 35,000 kilometers.


As of the end of 2008, Changqing, Tarim, Southwest, Qinghai and other major natural gas producing areas have constructed a network of transmission pipelines, with a total mileage of about 24,000 km, accounting for 78% of the national total mileage, doubled from 2000. The West-to-East Gas Transmission Project provides gas to 11 provinces and 62 cities, and about 57 million families or 200 million people benefit from it.


China is actively promoting northeast, northwest, and southwest, offshore gas pipeline construction. By 2015, its natural gas pipe network should be more complete.


"Between 2009 to 2015, the state plans to build new trunk lines of 24,000 kilometers, with total pipeline reaching 48,000 km, double that of 2008," says Wang Bin. 


The planned natural gas pipelines include: the second line of West-to-East Gas Transmission Project, the third line (Horgos - Shaoguan), the fourth line (Turpan - Zhongwei), China-Burma pipeline, Zhongwei - Guiyang pipeline, Sakhalin gas pipeline, the third line of Shaanxi-Beijing, Qin Huangdao-Shenyang line, and the Shandong natural gas pipeline networks. Wang Bin says, "By 2015 all the pipelines will be put into production and the state natural gas supply will be greatly improved."


To ensure natural gas sales, the construction of natural gas extensions and tie-lines are on the way. Between 2009 to 2015, the state plans to build about 8,000 kilometers of branch pipelines in four target markets: the southeast, the Yangtze River Delta, the Bohai Rim, and Central South.



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