Sinopec aims to sweeten energy supply

Company to explore and tap rich reserves of sour natural gas

China will boost sour natural gas exploration to ease the country's tight energy supply, said an official at China Petroleum and Chemical Corp on Monday.

Puguang gas field, owned by the company, also known as the Sinopec Group, has produced about 10 billion cubic meters of natural gas in the past year, accounting for about 8.3 percent of China's total natural gas output.

The gas field, located in southwestern Sichuan province, is the largest high-sulfur natural gas field in the country, with proven reserves of 412.2 billion cu m.

"China is one of a few countries that owns the technology to explore natural gas in high-sulfur gas fields on a large scale," said Cao Yaofeng, vice-president of Sinopec.

Natural gas accounted for 23.7 percent of global primary energy consumption in 2011, while in China it was only 4.5 percent, resulting in an urgent call to develop natural gas resources as part of the country's energy strategy.

China has rich reserves of natural gas with high sulfur levels - or sour natural gas - with proven reserves of more than 1 trillion cu m in total, according to Sinopec.

"The geographic condition in southwestern China, the area rich in sour natural gas, is difficult for exploration," said Qian Li, senior industry analyst at the energy consultancy ICIS C1 Energy.

"So the successful sour gas exploration in the Puguang gas field is a breakthrough for the industry."

The technology has been applied in Sinopec's other high-sulfur natural gas fields, including Dawan, Yuanba and Xinglong in Sichuan province and Chongqing municipality.

By the end of 2015, exploration in these fields will add another 10 billion cu m to annual output, said Cao.

The resources will be used in the 70 cities within six provinces - Sichuan, Hubei, Jiangxi, Anhui, Jiangsu and Zhejiang - and two municipalities, Shanghai and Chongqing.

"China's technology development in sour natural gas exploration can help scale gas output to supplement domestic liquefied natural gas," said Qian.

Also, countries such as Kazakhstan and Uzbekistan in Central Asia are in discussion with Sinopec about introducing its sour gas technology in the development of their industries.

Puguang gas field was discovered in 2003 and developed in 2006 as the key project in China's major energy program to deliver gas from Sichuan to eastern China.

Sinopec invested around 62 billion yuan ($9.96 billion) in the project including gas exploration, pipeline construction and a sour gas purification plant, Cao said.

The purification plant can purify 12 billion cu m of sour natural gas to produce 2.1 million metric tons of sulfur for agricultural use annually, which accounts for 45 percent of China's total sulfur output.

Sulfur is an important element in fertilizer production, so its import and domestic output have a big effect on food prices.

Currently, two-thirds of sulfur consumption in China still depends on imports.

"The purification plant in Puguang has almost doubled China's sulfur output, which helps the country reduce imports and stabilize sulfur prices," said Cao.

The project also can reduce the levels of carbon dioxide by 16.8 million tons each year, and of sulfur dioxide, nitrogen and oxides by 698,000 tons, he said.