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Natural Gas Pipeline Network Construction in CNPC:

Current Status and Trends

September 24th - 26th, 2013 Xi’An

GAO Peng PetroChina Planning & Engineering Institute

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Contents

Current status of natural gas pipeline network construction in CNPC

Development fundamentals of natural gas pipeline network construction in CNPC

Development Trends of natural gas pipeline network construction in CNPC

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• In 1996, the 1st Shaanxi-Beijing gas pipeline was put into construction, which opened the large-scale construction of natural gas pipelines for China. Since then, the SeNingLan pipeline, the 1st and 2nd west-east gas pipeline, the 1st,2nd and 3rd Shaanxi-Beijing pipeline, Jining inter-connection pipeline have been built.

• By the end of 2012, the trunk and 8 branches of the 2nd West-East Gas Pipeline were put into operation, connected with more than 20 domestic and foreign pipelines. The clean energy was delivered to the areas along the routes, which greatly improved China's energy consumption structure. Thus, the natural gas ratio in the total primary energy consumption rose from less than 3% to nearly 5%.

Source: CNPC Press

Natural gas pipeline network construction in CNPC

In operation In construction

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CNPC is China‘s largest oil and gas pipeline contractor and operator. In 2012, CNPC gas and pipeline business focus on achieving the goal of Green CNPC. Our natural gas operations and sales revenues continued to grow.

• Pipeline network: About 40 thousand kilometers of natural gas pipeline in China in operation; 5 Pipeline regional companies, be responsible for the corresponding region of pipeline operations and management.

• Underground gas storages : We extracted more gas from our underground gas storages in Dagang, Huabei and Jintan to meet the needs of seasonal peak-shaving.

• LNG receving terminal： The LNG terminals in Jiangsu and Dalian maintained steady operation, playing an effective role in peak-shaving and providing emergency supplies.

• Natural gas marketing：Natural gas sales reached 97.3 bcm of natural gas in 2012, up 17.7% year-on-year, covering 29 provinces, municipalities and autonomous regions in China。

Source: www.cnpc.com.cn

Natural gas and pipeline business in CNPC

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Gas pipeline technical level

•In 1997, the Shaanxi-Beijing pipeline put into operation.

•China natural gas pipeline construction began toward long-distance, large-diameter, high-pressure and highly automated management direction

•In 2004 and 2005, the 1st West-East Pipeline and the 2rd Shaanxi-Beijing Pipeline put into operation •Create the new record of long-distance, large-diameter, high-pressure for China gas pipeline construction, making 1016 mm diameter, X70 pipe steel, design pressure of 10 MPa been successfully applied

•In 2009, the west section of the 2nd West-East Pipeline put into operation •China gas pipeline reached 1219 mm in outside diameter, X80 in pipe steel,12 MPa in design pressure and 30 bcm annually

6 X80 离心式压缩机

The technology of natural gas infrastructure construction and major project construction has improved continuously

——With the 2nd West-East Pipeline and the other large-scale pipeline projects being implemented gradually. It has driven the domestic X70 and X80 serious steel pipes, 40-inch and 48-inch high-pressure and large-diameter pipe welded ball valves, 20-Megawatt class electric drive compressors been successfully developed and applied.

——The own technologies in underground gas storage, LNG terminal and the other engineering construction are mastered.

Localization of major equipment for large-diameter, high-pressure, high-grade and long-distance pipelines

Technology about thin multi-laminated construction of salt cavern underground gas storage

Independent design, construction technology and capabilities for LNG terminals

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In 2012, the 3rd West-East Gas Pipeline project was launched. Its investment

are from CNPC and the National Council for Social Security Fund, Urban

Infrastructure Construction Investment Fund, Baosteel as shareholders. And the

private capital from the Industrial and Commercial Bank of China (ICBC) will flow

to the project through the urban infrastructure facilities investment fund.

The introduction of social capital investment into the 3rd West-East Gas Pipeline project

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Contents

Current Status of natural gas pipeline network construction in CNPC

Development fundamentals of natural gas pipeline network construction in CNPC

Development Trends of natural gas pipeline network construction in CNPC

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1 The rapid economic development in China is the driving force for the oil and gas demand

the economic development situation of cars and cargo industry in China

The development of China's economy is always maintaining a high development speed in the past thirty years, and the economic account is ranking the second in the world. It is estimated that it will keep the development of high speed (7% - 8%) in the next period of time.

Economic development will drive the development of car and transport and other related industry, and it will drive the growth of oil and gas consumption.

Gross Domestic Product (billion Yuan)

Car ownership (thousand car)

freight turnover (million ton-kilometers )

52 trillion Yuan

17 trillion ton-km

100 million cars

10th of the world

6th of the world

4th of the world

3rd of the world

2nd of the world

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0

5

10

15

20

25

30

35

40

1980 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

水核风电 天然气 石 油煤 炭 能源增速 经济增速

6.0 68%

19% 5% 8%

The situation of energy consumption in China between 1980 and 2012 (100 million tce)

The total energy consumption in China is 3.62 billion tons of standard coal in 2012, and the coal accounted for 66.2%. In the first half year of 2013, the average ratio of air quality standard number of days in 74 cities is 54.8%, and the excessive number ratio is 45.2%.

2 Energy consumption is growing rapidly. But the consumption structure is unreasonable, and the environment stress is huge

Wind power Natural gas Oil

Coal Energy growth Economic growth

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3 The growth rate of gas consumption in China is the first among the world

The natural gas consumption in 2012 is 147.1 bcm, and it is the fourth in the world. And it accounted for 5.5% of the total primary energy consumption in China.

China's natural gas consumption is growing by an average rate of 21% since 2005.

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4 Strong demand in China's natural gas market

The official commercial operation of West to East project in 2004 is

marking the China gas market turn from the start-up period into the

development period.

If consider the management of PM2.5, it is estimated that the demand of

natural gas market will be considerable.

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• 12th Five-Year Plan for Natural Gas (2011-2015) (Issued in October 2012, NDRC), and

12th Five-Year Plan for Energy (2011-2015) (Issued in January 2013, State Council )

• Both the plans put forward clearly to key missions on accelerating the oil and gas

backbone pipeline network construction, and speeding up the construction peak-shaving

facilities. The focus is natural gas pipeline construction.

5 12th Five-Year P lan for Natural Gas and Energy successively released, and more clear policy direction for pipeline construction

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Contents

Current Status of natural gas pipeline network construction in CNPC

Development fundamentals of natural gas pipeline network construction in CNPC

Development Trends of natural gas pipeline network construction in CNPC

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1 CNPC will implement diversified natural gas resource supply for China market in the future

• To meet the huge demand of domestic market, CNPC will form

diversified natural gas resources supply, such as the domestic

conventional gas, unconventional gas(CBM, shale gas), coal-based

synthetic natural gas, imported LNG, pipeline gas imports and so on.

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Technology dvelopment goals: • With the safe, economical and optimized operation ability for the large pipeline

network; • Newly-built trunk pipeline to achieve a high level of design, construction and

operation management, reaching the world advanced level; • Reduce energy consumption for the pipeline transmission; • Strengthen pipeline safety management, and reduce pipeline accident rate.

Key technology research • Pipeline Leak Detection Technology • Automatic pipeline welding and ultrasonic testing integrated technology • Pipeline production information system • Geographic Information System • Pipeline safety assessment and risk management technolgy • Pipeline quick repair and maintenance technology • Energy-saving and environmental protection technology • ……

2 Development Trends of natural gas pipeline network technology in CNPC

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The development direction of large-diameter, high-pressure, and High-grade steel

Diameter: DN700→DN1000,DN1200 Pressure: 6.3MPa→10MPa,12MPa Steel grade: X65→X70,X80 Capacity: 17bcm→30bcm annually

Diameter: 1420mm Pressure: 11.8MPa Steel grade: X80 Capacity: 50bcm annually

Keep progressing for the direction of large-diameter, high-pressure, and High-grade steel

USA Alaska-Alberta pipeline

(In plan)

China 1st and 2nd West-East Pipeline 3rd West-East Pipeline (Under construction)

Diameter: 1219mm Pressure: 17.2MPa Steel grade: X80 Capacity: 45-59bcm annually

Russia Baffa Petrenko-Ucha pipeline

(Under construction)

管道建设世界发达国家

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The degree of network keep increasing

• Compared with the developed countries or regions, there is still a large difference in the

degree of natural gas network in China .

• The construction of natural gas pipeline network still is the development trend in China.

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The process of localization of the key equipments and control systems will

be continued to advance

• At present, via the 3rd West-East pipeline project, CNPC is to gradually realize the

gas pipeline localization of key equipments, such as high-power long-distance pipeline

compressor.

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The next few years will continue to be the peak period of China gas pipeline

construction

•With the import of large foreign resources and the production growth of some domestic

gas-fields as well as the market booming, the natural gas infrastructures is bound to be

substantially developed.

• It is estimated that until 2020, CNPC will shaped a comprehensive national gas

pipeline supply system with connected to the import resources, the major domestic

natural gas producing fields, the LNG receiving terminals, the underground gas storages.

The system will be resource-diversified, scheduling-flexible, supply-stabile and peak-

shaving facility-complete.

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1st: Especially note the construction of the supporting underground gas storages ,

the LNG emergency peak-shaving terminals and some hub stations, in order to ensure

the safe operation of the pipeline network running smoothly.

3 The pipeline interconnection problems need to be concerned

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2nd: Recommend to formulate a standard on pipeline pressure rating, for

convenience of the pipeline network planning and wholy building

At present, China has not yet formed a unified standard of the pipeline pressure

rating series.

Suggestion:

12MPa (Trans-national pipelines, national inter-

regional trunk, interconnection pipeline)

10MPa (National inter-regional trunk,

interconnection line, Branch trunk line

6.3MPa(Sub-transmission branch)

4.0MPa（Branch line,distribution

network

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3rd: Recommend a standardized network gas property conditions, and make

the timely implementation of energy metering

When the gas with different Calorific values from the different resources enter the

same network, such as the import pipeline gas, import LNG, CBM, shale gas, SNG,

and the domestic natural gas, the gas property standard problem is particularly critical.

Source: [1]LUO Dongxiao. Natural Gas Industry, 2006 [2] LI Luguang. Natural Gas Industry, 2011

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Thank you for your attention!