Sino Gas was proud to announce first pipeline pilot sales on December 1, 2014. The pilot program completes the value chain and is designed to provide valuable information on the long term sustainable reservoir productivity to assist in planning the full field development.
First gas was brought on from the Sanjiaobei Central Gathering facility, with wells from both the Sanjiaobei and Linxing PSC being tied-in from a pool of 16 pilot wells. First production from the Linxing (West) Central Gathering Facility is planned for mid-2015, where installation of equipment and gathering lines is already underway. Initial installed capacity of the two Central Gathering Facilities is ~25 MMscf/day with space for expansion. Initially 29 wells are planned to be tied in as a part of the first phase of the pilot program.
Under the Gas Sales Agreement with Lin County Jiahao New Energy Company Limited, gas will be exported to market via the Yuji pipeline to the eastern province of Shandong. Gas sold from the Sanjiaobei central gathering station will be sold at initial prices of up to ~US$9.50 per thousand cubic feet, along with an annual price adjustment mechanism linked to market pricing and applicable government policies.
Jiahao is a subsidiary of Shanxi Huifeng Gas Group Limited, which is an industrial and commercial gas company based in the capital city of Taiyuan. Jiahao was established in the local county in 2012 to focus on downstream activities in the region and is currently constructing an LNG plant in the nearby town of Tuban. It has a planned daily processing capacity of approximately 300,000 tons and is expected to untilise gas purchased from the pilot production program once is comes online.
In the longer term, Sino Gas’ PSCs benefit from multiple nearby gas pipelines with existing tie-in points which provide optionality for direct market access. Further pipeline gas sales agreements are being negotiated.