Gas Pipeline to Recycle Waste Heat

China's largest energy conservation company signed two bilateral cooperation agreements Tuesday with China National Petroleum Corporation and GE Oil & Gas to recycle waste heat created by the country's longest gas pipeline project, according to a statement co-released by the three companies.

It is an important move in improving the country's industrial efficiencies, though challenges remain, analysts told the Global Times Tuesday.

Under one of the agreements, the State-owned China Energy Conservation and Environmental Protection Group (CECEP) will offer measures to generate electricity from waste heat created by the compressor stations of China National Petroleum Corporation, the country's largest oil and gas producer, which is constructing gas transmission pipelines from western to eastern China.

CECEP's other agreement is a Memorandum of Understanding with GE Oil & Gas, which will be in charge of providing technology, equipment and services for this waste heat recycling program.

Part of the electricity generated from the waste heat will be connected into the State Grid, China's largest electricity grid operator, according to Cao Yang, China regional manager of GE Oil & Gas, speaking to the Global Times at a press conference Tuesday.

"The projects should avoid any negative impact on the current gas pipeline, which is one of the challenges facing the program," Cao said.

The three companies will first launch the waste heat recycling project in Yanchi, a county in Northwest China's Ningxia Hui Autonomous Region, and Nanchang, the capital of East China's Jiangxi Province, Wang Xiaokang, chairman of CECEP, said at a press conference Tuesday

The project will be expanded to more regions if the two programs succeed, Wang said, without disclosing details about the total installed capacities of the programs.

Wang told the Global Times that his company is still negotiating with the State Grid about whether and how they will connect the electricity they generate.

Zhang Lizi, a professor at North China Electric Power University, told the Global Times Tuesday that normally, larger generating capacities make it more feasible to connect electricity into the grid, adding that current technological conditions mean power generation from waste heat is relatively small.

By 2010, the total installed capabilities of power generation from waste heat have reached 12 million kilowatts, Shanghai Securities News reported in June, citing a report released by the National Development of Reform Commission.

The central government set a target of 26 million kilowatts in its 12th Five Year Plan (2011-15), according to the newspaper. (Peopledaily, Edited by Topco)

CNOOC Hits Gas Again in Yinggehai

Chinese energy giant CNOOC Ltd. (CEO ) has come across a big gas field in the Yinggehai basin in the South China Sea, as reported by the chairman of its parent company - China National Offshore Oil Company ("CNOOC").

The recoverable reserves from the basin are still under appraisal by the state. The announcement of the new gas find follows CNOOC's high pressure/high temperature (HP/HT) find at the Yinggehai basin in the western South China Sea in April this year. This marked a breakthrough for the company at the HP/HT gas reservoir at Yinggehai, highlighting the exploration potential of the basin.

CNOOC reported that the DongFang (DF) 13-2-1 well in the Yinggehai basin hit a 35-meter thick gas pay zones. The well reached a depth of 3168 meters and gas was spud at a water depth of 65 meters. In the course of the test phase, well flow rate was recorded at 42.4 million cubic feet of natural gas per day.

The successful evaluation of the middle formation of the DF 13-1 gas field, way back in 2010, led to the current discovery.

In August 2012, CNOOC had spud gas output of over 1 million cubic meters per day in a single well in the Dongfang 13-2, which made it one of the largest gas discoveries offshore China. Located in northwestern part of the South China Sea - Yinggehai basin - is believed to be gas rich. A major part of the South China Sea, which extends from China to Indonesia and from Vietnam to the Philippines is assumed to hold rich oil and gas resources.

Recent successful oil discoveries - like Luda 6-2 and Lufeng 15-1 − in two different plays in China bear evidence to CNOOC's constant efforts to upgrade its portfolio and enhance shareholder value.

We remain positive on CNOOC's performance, which reflects its premium assets portfolio, excellent execution strategy, unique position as a pure oil player and potential transactions in the merger and acquisition space.

(Nasdaq, Edited by Topco)