China National Petroleum Corp. and Shell Exploration China Ltd. have agreed to develop a major gas resource in northwestern China along with the infrastructure to transport and utilize the gas.
The deal calLs for Shell and CNPC to develop Changbei gas field in the Ordos basin, lay pipelines to move the gas to market in eastern China, and build gas-fired power generation plants in Northeast China that would use the gas.
Investments ultimately could total as much as $3 billion under a contrad that the two firms signed in Beijing Sept. 23.
Shell, serving as the 1,600 sq km Changbei block operator, will cover all the investment for the gas exploration, production, and pipeline construction. CNPC has drilled 30 gas wells on the block, which has resulted in the discovery and delineation of a 73 billion cu m natural gas resource, of which 30% is estimated to be recoverable. Shell plans to spend 2 years evaluating the field, which will include the drilling of several wells. Field development and pipeline construction is expected to begin in 2002.
CNPC and Shell plan to bring the gas field into production in 2003 and are targeting initial gas production of 3 billion cu in/year for residential consumption and power generation in Beijing and the Shandong province cities of Tianjin, Hebei, and Shandong.
Brian Anderson, chairman of Shell Cos. in Northeast Asia, said that Shell is honored to be signing the first major integrated gas development agreement between CNPC and a foreign partner: "In helping to develop more gas production from Central China, CNPC and Shell will increase the supply of reliable, high quality, environmentally sound energy to consumers in Northeast China."
China in recent years has embarked on a major push to develop its natural gas resources and to develop an infrastructure for trans proting and utilizing the gas, as its oil production concerns whittle away dependence on coal.
Natural gas resources in China are posttulated at 10 trillion cu m, 3 trillion cu m of ar thought to be recoverable. The nation's gas production last year was 22 billion cu m.
