Green Dragon will build a pipeline connecting the Greka Shizhuang South (GSS) integrated production facility and the Huabei oilfield Fan 4 station.
The Huabei oilfield is south west of Green Dragon’s gas gathering station and is a connection point to the PetroChina West East 1 pipeline.
The initial design for the 7.5km pipeline connecting to Huabei’s system is based on an annual capacity of 6.45bcf.
Subject to obtaining the relevant permission, construction of both the main-trunk pipeline at GSS and the 7.5km pipeline to Huabei’s system is expected to be completed by by the end of 2011.
The estimated total cost to Green Dragon for the pipeline and ancillary equipment is approximately $2.5m.
The agreement is for 20 years until 31 December 2031 and contracted annually for the following year’s volume and price.
The first contract is for an annual production of 2.58bcf, and it is envisaged that following additional construction approvals by the local government, the pipeline will be expanded to receive the remaining 3.87bcf annually.
The West East 1 pipeline is 4,000km long pipeline, running from Lunnan in Xinjiang to Shanghai.
The pipeline, which is owned and operated by a subsidiary of PetroChina, has a total capacity of 12 billion cubic metres of natural gas, annually.
Green Dragon is involved in the production of CBM gas and the distribution and sale of wholesale gas in China.
