West-East Gas Pipeline Project Begins Commercial Operation

abarrelfullabarrelfull wrote on 21 May 2012 12:57

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December 30, 2004

PetroChina Company Limited (HK 0857; NYSE PTR) today announced the commencement of the commercial operation of its West-East Pipeline project, which is one year ahead of schedule. This marks the realization of PetroChina's solemn promise to build a top class natural gas transmission pipeline in China.

The West-East Pipeline is the longest gas pipeline in the country, with the largest size of the pipe diameter, the top quality pipe materials, the highest level of designed pressure, the largest transmission capacity, and the highest standards of automated control. The pipeline originates from Lunnan of the Tarim gas field in Xinjiang in the west, and runs through Xinjiang, Gansu, Ningxia, Shaanxi, Shanxi, Henan, Anhui, Jiangsu, Zhejiang and Shanghai to its final station of Baihe Town of Shanghai in the east. The total length of the Pipeline is about 4000 kilometers. It crosses the ancient Great Wall six times, the Yellow River three times, the Yangtze River once, other major rivers three times, and roads and railways 118 times. The Pipeline is the first world-class natural gas pipeline project designed and built entirely by PetroChina.

With rich natural gas reserve, the Changqing gas field in the Odors Basin is the start-up gas source of the Pipeline. It has undertaken to transmit gas from Jingbian in Shaanxi to Shanghai. As the main gas source of the Pipeline, the Tarim Basin has sufficient natural gas resources and a huge development potential. The proven original gas in place was only 7.8% of the speculative trap gas resources. The gas reserve is stable and reliable to supply 20 billion cubic meters of gas per year for 30 years.

The target markets in the down stream of the Pipeline are east-central China and the Yangtze River Delta. PetroChina has signed the gas sales agreements with 40 users in Henan, Anhui, Jiangsu, Zhejiang, and Shanghai. The volume confirmed has reached 12 billion cubic meters of gas per year, which is the designed capacity of the pipeline. By far, the project has provided 1.3 billion cubic meters of natural gas to 23 users.

The Pipeline is a massive project as revealed by the following facts: more than 30 million cubic meters of earth and stone were dug and moved, an effort equal to laying a one-meter-wide and height road long enough to circle the earth; 1.74 million tons of rolled steel was used. There are 350,000 welding lines along the 4,000-kilometer pipeline and the total circumference reaching over 1,100 kilometers. It took just over 4 years to complete the project, which is a miracle in the global history of pipeline construction.

The Pipeline is a top world-class pipeline constructed with the application of advanced high technologies. Eight professional design institutes, more than 30 science research academies and nearly 2,000 science and technology staff participated in the project. They tackled over 700 key science and technology problems and filled 30 gaps in domestic technology. The project introduced several advanced high technologies for the first time in the country, such as the high-pressure transmission at 10mpas, pipes with 1,016mm diameter, X70 high-quality steel pipelines, 30 megawatt compressor stations, the technology of inner-coating for resistance reduction, optimized compressor pressurization system, and air drying technologies, as well as traversing technologies such as the Yangtze River shield structure and the Yellow River pipeline penetration and directional drilling, etc., which greatly upgraded the level of construction and operation of long-distance transmission pipeline in China.

The quality of the Pipeline is of advanced global level. The project adopted a comprehensive quality control mechanism, all staff work safety system, and lifetime responsibility for the project quality. The average one-time up to the standard rate reached 98.3%, 10% higher than that of similar projects, setting a new record in China's history of pipeline construction. The green plan of the project is "keeping more greenbelt for deserts, and providing a blue sky for animals and plants". The project followed the principle that the land will be recovered to its original outlook after construction. The project brought a harmony between the nature and energy resources.

The project created a comprehensive project management model and operation system suitable for the construction. It adopted modern international project management model, and implemented project corporate responsibilities in line with market economy principles and Sino-foreign cooperative supervision system in all dimensions and during the whole process. It also practiced an open, just and fair bidding system, and adopted a contract system to control both contracting parties through economic and legal means and introduced a third party supervision system for the project.

Already benefiting part of the downstream areas, the project plays an important role in boosting the economic development, environment protection, and people's living standard in these areas. PetroChina will benefit from the pipeline in terms of its natural gas production growth and investment return. After the full commercial operation, PetroChina will make more efforts in exploration and development in the upper stream to ensure resource supply. Also, it will strengthen the safety management of the full line operation to ensure smooth and safe operation and to improve the quality of gas supply and service level. PetroChina will deliver the gas volume as planned, accelerate return on investment and create better economic benefit.

The West-East Pipeline Project is viewed as a landmark project in China's history of pipeline construction, as well as the largest project PetroChina has invested and constructed since its listing. The completion and operation of the project signifies the initial establishment of PetroChina's trunk line network in China, and that its natural gas business has entered a new era of rapid development.

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