GE, HongHua Group Deal to Power Rigs for China's Shale Projects

With China seeking to boost its production of unconventional gas supplies to meet Asia’s growing energy needs, GE Power & Water’s Distributed Power business and China’s leading drill rig manufacturer HongHua Group (HK 196) signed a three-year agreement Monday for GE to supply its Waukesha VHP gas engines that will power drill rigs used in new shale gas projects in China. The announcement was made at the Offshore Technology Conference being held in Houston.

In recent years, GE’s gas engine factory in Waukesha, Wisconsin, has seen orders steadily increase as more countries seek to develop their domestic natural gas resources to increase their local energy independence.

“GE’s proven Waukesha gas engines have earned industry-wide recognition for their high levels of efficiency and reliability in powering successful shale gas projects in the United States,” said Zhang Mi, chairman and president of Honghua Group. “Our agreement with GE strengthens our ability to sell more drill rigs by offering them Waukesha gas engines as a more cost effective on-site power solution.”

For GE, the agreement with HongHua—which also is the world’s second largest drill rig supplier—illustrates GE’s successful strategy to collaborate with local companies in China’s oil and gas sector in support of the country’s efforts to diversify its energy supplies.

“Our agreement with HongHua strengthens our position as a leading gas engine supplier for drill rigs in Asia as GE continues to expand its role in the global unconventional gas sector in China and other key markets around the world,” said Darryl Wilson, vice president and chief commercial officer of GE’s Distributed Power business. “Our Waukesha gas engine technology is an important part of GE’s Unconventional Solutions portfolio of products that benefit critical segments of the gas value chain.”

The Waukesha gas engines will be fueled by on-site field gas or with commercial grade gas to generate 2.8 to 3 megawatts of on-site power. By utilizing this field gas, drill rig operators will be able reduce their fuel transportation costs and optimize the availability of the rigs. With Waukesha gas-powered engines, users have the option to run almost any gaseous fuel from 950–2600 BTU. That includes everything from hot field gases, commercial grade gas, LNG, CNG and up to HD-5 propane.

GE plans to begin shipping the Waukesha units to China in May 2014, and the first pilot rig is scheduled to begin operation in September 2014.


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