Sino Gas & Energy Holdings Limited (Sino Gas or the Company) provided Tuesday an update on operations and commercial matters.
Gas Market Update
In line with Government polices to stimulate gas demand to support its environmental objectives, the National Development and Reform Commission (NDRC) announced that China gas demand in November 2015 grew 9.7 percent compared to the same month in the prior year, driven largely by increased demand for heating and delays in the arrival of liquefied natural gas (LNG) imports. The recent reduction in city gate gas prices is expected to further boost gas demand as supply contracts are renegotiated.
Following the NDRC city gate price revision announced in November 2015, a revised wellhead gas sales price of $0.25 (CNY 1.63) per cubic meter or approximately $7.10 per thousand standard cubic feet (Mscf) has been agreed with a new local gas buyer, Shanxi Guoxin Energy (Guoxin), for Sanjiaobei gas production. The agreement is now being formalized with the PSC Partner, PetroChina Coalbed Methane Company Ltd. (PCCBM). Guoxin is owned by the Shanxi Provincial Government and operates a 3,340 mile (5,376 kilometer) pipeline network and 127 CNG/LNG filling stations, covering a significant portion of Shanxi Province.
The Company continues to make good progress towards Overall Development Plan (ODP) approval and has been informed that the Sanjiaobei Chinese Reserves Report (CRR) is progressing through technical reviews and approval is expected mid-year. Once approved, ODP preparation will commence and approval remains on-track for 2017.
The Sanjiaobei PSC, which commenced pilot gas production in December 2014, obtained all regulatory approvals in November 2015 to enable the PSC partner, PCCBM to pay the joint venture company, Sino Gas & Energy Limited (SGE) for gas sales. PCCBM recently proposed a revenue sharing mechanism for pilot production that does not justify further investment in production activities until a satisfactory outcome is achieved. The restart of the Sanjiaobei CGS will be driven by progress on the receipt of gas sales proceeds. Discussions are ongoing with the PSC partner.
A revised wellhead price for Linxing gas has been agreed at $0.246 (CNY 1.615) per cubic meter or ~$7.04/Mscf with Shanxi GuoHua Energy Limited Company following the NDRC price revision in November and is expected to be applied retrospectively from Nov. 20, 2015.
By the end of 2015 a total of 14 wells had been tied into the Linxing CGS, including 6 wells from the TB-26 area to the north of the CGS as well as horizontal well, TB-1H. Since commissioning, ~10 wells have been on-stream, producing up to 7.3 Million standard cubic feet per day (MMscf/d). Subject to the receipt of gas sales proceeds by SGE, the Company currently expects to tie-in two horizontal wells drilled in 2015 and drill additional wells to support the ramp-up and maintain plateau at full capacity of ~17 MMscf/d in 2016.
View Full Article
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you