Clear The Air Energy Blog Rotating Header Image

Natural Gas

Fracking produces annual toxic waste water enough to flood Washington DC

From Suzanne Goldenberg of the Guardian (4 Oct 2013):

There are growing concerns over radiation risks as a report find widespread environmental damage on an unimaginable scale in the US.

Fracking in America generated 280bn US gallons of toxic waste water last year – enough to flood all of Washington DC beneath a 22ft deep toxic lagoon, a new report out on Thursday found.

The report from campaign group Environment America said America’s transformation into an energy superpower was exacting growing costs on the environment.

“Our analysis shows that damage from fracking is widespread and occurs on a scale unimagined just a few years ago,” the report, Fracking by the Numbers, said.

The full extent of the damage posed by fracking to air and water quality had yet to emerge, the report said.

But it concluded: “Even the limited data that are currently available, however, paint an increasingly clear picture of the damage that fracking has done to our environment and health.”

A number of recent studies have highlighted the negative consequences of horizontal drilling and hydraulic fracturing, which have unlocked vast reservoirs of oil and natural gas from rock formations.

There have been instances of contaminated wells and streams, as well as evidence of methane releases along the production chain.

The Environment America report highlights another growing area of concern – the safe disposal of the billions of gallons of waste water that are returned to the surface along with oil and gas when walls are fracked.

The authors said they relied on data from industry and state environmental regulators to compile their report.

More than 80,000 wells have been drilled or permitted in 17 states since 2005.

It can take 2m to 9m gallons of water mixed with sand and chemicals to frack a single well. The report said the drilling industry had used 250bn gallons of fresh water since 2005. Much of that returns to the surface, however, along with naturally occurring radium and bromides, and concerns are growing about those effects on the environment.

A study published this week by researchers at Duke University found new evidence of radiation risks from drilling waste water. The researchers said sediment samples collected downstream from a treatment plant in western Pennsylvania showed radium concentrations 200 times above normal.

The Environment America study said waste water pits have been known to fail, such as in New Mexico where there were more than 420 instances of contamination, and that treatment plants were not entirely effective.

“Fracking waste-water discharged at treatment plants can cause a different problem for drinking water: when bromide in the wastewater mixes with chlorine (often used at drinking water treatment plants), it produces trihalomethanes, chemicals that cause cancer and increase the risk of reproductive or developmental health problems,” the report said.

About 260bn US gallons of the 280bn US gallons of toxic waste water were from Texas, a state that has undergone three years of severe drought and where there is fierce competition for water between the oil industry and farmers and ranchers.

Environment America said that water was now taken out of the supply and that storing, transporting and even recycling the toxic waste carried environmental risks. “”They say a lot of it is recycled. It is still 280bn gallons of toxic waste generated that is running through our communities,” said John Rumpler, author of the report.

Spokespersons for Energy in Depth, the industry lobby group, disputed the findings as “alarmist:” and “meaningless”.

“Number is meaningless unless they’re alleging something is happening with it, ie ending up in tap water,” Steve Everley, the lead spokesman for the lobby group said on Twitter.

Other consequences of fracking highlighted in the report included: 450,000 tons of air pollution a year and 100m metric tons of global warming pollution since 2005.

Prediction of utilities’ natural gas needs may have been too high

Published on South China Morning Post (

Home > Prediction of utilities’ natural gas needs may have been too high

Prediction of utilities’ natural gas needs may have been too high

Submitted by admin on Jan 9th 2013, 12:00am

News›Hong Kong


Cheung Chi-fai

Environment officials tried yesterday to ease fears of drastic electricity price increases in the next few years, saying the city might not need to double the amount of natural gas used by 2015 as was previously predicted.

Vivian Lau Lee-kwan, deputy permanent secretary for the environment, said better-than-expected effectiveness of sulphur scrubbers installed at the power companies’ coal-fired generation units meant they might not need to burn more gas to meet emission caps in three years.

Lau was speaking at a meeting of the legislature’s Economic Development Panel to discuss this year’s power prices.

Her comment was made in response to lawmakers’ fears that the charges of CLP Power would surge drastically as more and higher-priced gas was used.

The Environment Bureau earlier projected that gas use would need to double by 2015 so that the power firms could meet the emission targets for that year. But the latest review showed that this could be postponed, though it was not immediately known to which year. Currently, natural gas accounts for about 20 per cent of CLP’s fuel mix. The rest is 50 per cent coal and 30 per cent nuclear.

“The two power firms might need to go back to review their data. But it seems now that we don’t need to double,” Lau said.

The challenge would be greater for CLP, which is switching to new gas piped from Central Asia via the mainland this year as its much cheaper supplies from Hainan Island run out.

It is estimated that power charges could rise by 20 cents per kilowatt hour above the 2012 level if all the gas provided for in a just-approved contract is used.

In the 20-year contract between CLP and PetroChina, Hong Kong can import up to 6 billion cubic metres of gas a year. The per-unit price of gas is between US$18 and US$20.

CLP Power managing director Richard Lancaster said it was still difficult to gauge how long the cheaper gas from Hainan would last. “It could be some years before it is exhausted,” he said.

The price of gas from the shrinking Hainan reserve is just a third of that from Central Asia. The firm said the reserve would still supply about 30 per cent of the gas it needed this year.

Lancaster said future power prices would be subjected to various factors including electricity sales and levels of investments.

CLP Power and Hongkong Electric increased charges by 5.9 per cent and 2.9 per cent respectively this year. Most of the rise was attributed to increasing fuel costs.


Electricity Generation

Natural Gas

Public Utilities

CLP Power



Source URL (retrieved on Jan 9th 2013, 6:27am):

Audi to open natural gas, hydrogen plant in 2013

19 December 2012

Audi to open natural gas, hydrogen plant in 2013

Automaker plans to sell new natural gas-powered cars and dive into hydrogen research

By Clifford Atiyeh
MSN Autos

Audi will open a renewable gas plant that will produce natural gas and hydrogen by early next year, making it the first automaker to build and run its own facility for such fuels.

The new, 44,000-square-foot facility in Germany will use water- and solar-generated electricity to produce hydrogen, in a process commonly known as electrolysis. Typically, large-scale hydrogen production has been blocked by excessively high costs and low yields, due to the amount of electricity required and the small amounts of hydrogen that can be produced.

While Audi did not say if its process would be more efficient, it said it would combine the hydrogen with waste carbon dioxide from another nearby gas plant to create methane, which comprises more than 95 percent of natural gas found underground and within shale rock. The result: renewable, synthetic natural gas from an environmentally friendly production process.

Audi says it can produce more than 1,100 tons of synthetic natural gas and consume nearly 3,100 tons of carbon dioxide each year. That would be enough to power 1,500 new Audis running on compressed natural gas for 9,320 miles year. The A3 TCNG, Audi’s first natural gas-powered car, will go on sale in Europe in late 2013. A natural gas trim of the next-generation A4 will bow in 2015.

Audi e-gas plant (c) Audi

Company parent Volkswagen has been selling “bifuel” vehicles — cars that can run on either natural gas or gasoline — for many years across Europe, as has Mercedes-Benz, Opel and Ford, but such models cost thousands of dollars more than gas-only cars and represent a tiny silver of the market as compared to diesel.

Due to record-low fuel prices, natural gas-powered cars are beginning to expand in the U.S., with special versions of the Ram, Silverado, Sierra and F-150 pickups. But without incentives or a major refueling infrastructure, natural gas remains rare among light-duty vehicles. Hydrogen, in even scarcer amounts, is a complete pipe dream at this point.

But Audi’s plant is a big step that may accelerate these alternative fuels into the mainstream. Until now, only Honda has built and sold a production hydrogen car; Audi’s German rivals BMW and Mercedes-Benz are bit players.

Honda has sold the Civic Natural Gas since 1998, and its resulting expertise in high-pressure fuel storage led it to sell the first production hydrogen fuel-cell car, the FCX Clarity, since 2008. Toyota has said it plans to market a similar hydrogen-powered car by 2015 and continues to run an experimental fleet of hydrogen-powered Highlander vehicles in the U.S. General Motors ran a fleet of 100 hydrogen-powered Equinox vehicles during a three-year demonstration from 2008 to 2011.

BMW used to run several 7-Series models on liquid hydrogen, as opposed to the fuel’s natural gaseous form, to demonstrate how conventional internal-combustion engines can be so equipped. So far, BMW hasn’t made progress in putting the car into series production. Mercedes-Benz is leasing the hydrogen-powered F-Cell, based on the European B-Class, to roughly 70 people in Los Angeles and San Francisco, where the highest concentration of public hydrogen stations — about 26 — are located.


Letter from Clear The Air to SCMP

13 Sept. 2010

Dear Mr Lee

Hong Kong Government’s EPA issued a target of slashing local carbon emissions by up to 33 per cent in a decade whilst positive action is awaited on mandating  the city’s Air Quality Standards .

Green Groups quoted by SCMP (not Clear the Air) commented that increased nuclear imports  proposed by Government were not the solution to reducing local carbon emissions.  US EPA figures for CO2, Sulphur  and NOx emissions for coal powered generation per each MWh of electricity produced  (kgs) are 1,022 / 5.9 / 2.73 respectively ; for natural gas the emissions are (kgs) 516 / 0.045 /0.77 respectively.  The emissions for nuclear power generation are  0 / 0 / 0 respectively – zero.

Source: energy/impacts

The report on comparison of fossil fuel versus nuclear is available at the US Department of Energy site:

CLP’s  sustainability report states it intends to move towards 50 % fuel mix using natural gas and to import more nuclear power .   CLP also has rights to import  50 per cent of the capacity of Phase 1 of the Guangzhou Pumped Storage Power Station at Conghua.

CLP is converting its ‘A’ station at Castle Peak to natural gas powered turbines whilst its ‘B’ station has been retrofitted with Desulphurization units to allow it (unfortunately) to continue to burn coal.

In 2009 the fuel mix for CLP for locally supplied power was :

Coal : 44.5%, Nuclear: 30.6%; Gas: 24.7%; Oil: 0.2%. CLP Figures on the fuel mix (presumably mainly coal) for generation of CLP’s 13,433 Terajoules  of electricity exported to Guangdong in 2009 were absent.

Figures for HK Electric (HEC)  fuel mix in  2009 are 20% gas / 80% coal. HEC states it intends to increase its gas mix to 30% in 2010.  The figures  show which power company is relying more on polluting fossil fuel as its major source of energy production.

Hong Kong lacks the land area for large renewable energy solar plants as used in California and wind power stations  as in Scandinavia , China and India. Neither does it have rivers that could produce clean hydro electric power. It is however surrounded by sea and the relevant authorities  should explore the use of offshore wave / tidal  power in the long term.

The two local power companies should fully interconnect with the Mainland grid to reduce backup and hence less wastage and have a more flexible connection capability (as in Australia) where households can sell their excess solar power back to the grid.  The cost of a typical CO2 capture system for a small 800MW fossil fuel power station could cost US$ 750 million thus possibly affecting Scheme of Control agreements. By comparison  CAPCO local installed capacity is 6,908 MW and HEC installed capacity is 3,756 MW.  Meanwhile Hong Kong is in dire need of  shipping Emissions Control Area legislation to restrict the burning of  bunker fuel in local PRD coastal waters and the removal of pre Euro and Euro 1 diesel vehicles from our roads.

James Middleton

Chairman Energy Committee

telephone and contact address is listed on our website.

Relevant Hong Kong data


41,725 Terajoules of nuclear power imported (30.6% of CLP’s local supply)

139,420 Terajoules generated at local plants

13,433 Terajoules exported to the Mainland

The US Environmental Protection Agency (EPA) identifies the following average emission levels in the production of 1 MWh of electricity
Kilos of Emissions per 1 MWh (converted from lbs as shown on the site)
Coal Oil Natural Gas Nuclear
Carbon Dioxide 1022 760 516 0
Sulfur Dioxide 5.9 5.45 0.045 0
Nitrogen Oxides 2.73 1.82 0.77 0 energy/impacts

  • Installed capacity factsheet * (excludes Daya Bay)

CLP Power Hong Kong Limited (CLP Power), founded

in 1901, supplies electricity to Kowloon and the New

Territories, including Lantau, Cheung Chau and most of

the outlying islands.

CLP Power’s local maximum demand in 2008 was

6 749 MW, while local sales amounted to 30.1 billion kWh.

At the year end, the company had 2.29 million customers.

At present, electricity is generated by three power

stations, namely, Castle Peak (4 108 MW), Black Point

(2 500 MW) and Penny’s Bay (300 MW), with the total

installed capacity being 6 908 MW. All these power

stations are owned by Castle Peak Power Company

Limited (CAPCO), 60% of which is owned by ExxonMobil

Energy Limited and 40% by CLP Power. CLP Power has

contracted to purchase about 70% of the power generated

at the two 984 MW pressurised water reactors at the

Guangdong Daya Bay Nuclear Power Station, some 50

kilometres from Hong Kong, to help meet the long term

demand for electricity in its supply area. It also has the

right to use 50 per cent of the 1 200 MW capacity of Phase

1 of the Guangzhou Pumped Storage Power Station, at


Wholly owned by CLP Power, the transmission

system operates at 400kV and 132kV while distribution is

mainly at 33kV, 11kV and 380V. The supply is 50Hz

alternating current, at 220V single-phase or 380V

three-phase. For bulk customers, supply is available at

132kV, 33kV and 11kV.

An extra high voltage transmission system, at 400kV,

transmits power from the Castle Peak and Black Point

Power Stations to the various load centres. It comprises

503 kilometres of double-circuit overhead line encircling

the New Territories, 52 kilometres of cables and 11 extra

high voltage substations.

By the end of 2008, CLP Power had 214 primary and

12 914 secondary substations in its transmission and

distribution network.

The company’s power system has been

interconnected with the Guangdong power system since

April 1979 and electricity is exported to Guangdong

Province. 80 per cent of the profit is given back to CLP

Power’s local customers

  • The Hongkong Electric Company Limited (HEC),
  • founded in 1889, supplies electricity to Hong Kong Island,
  • Ap Lei Chau and Lamma Island. Electricity is supplied from
  • the Lamma Power Station. At the end of 2008, the total
  • installed capacity of the station was 3 756 MW.
  • The maximum demand in 2008 was 2 589 MW, and
  • sales of electricity for the year amounted to 10.9 billion kWh.
  • At the year end, the company had 0.56 million customers.


Castle Peak Power Company

Limited (CAPCO), 60% of which is owned by ExxonMobil

Energy Limited and 40% by CLP Power

Environment questions for Undersecretary of the ENB remain uinanswered

3d human with a red question markClear the Air says:

This week we had the dust cloud from China sending our already high pollution levels off the scale.

An EPD spokesman on 22nd March stated that they had instructed the power companies to burn gas to try and alleviate the air quality. The statement was made by Mr Mok Wai Chuen, Assistant Director of Environmental Protection.

On 23rd March 2010 Mr James Middleton from Clear the Air’s Energy Committee called the Backchat program and asked why, if the EPD can direct CLP and HKEH to use gas this week, could the EPD not dictate to the power companies to use gas all the time instead of polluting coal. ‘Well, we do not have enough gas’ was Mr Mok’s reply.

Listen to the program here:

Look at our (unanswered) query to EPD below in October 2008.

From: James Middleton []
Sent: Tuesday, October 21, 2008 10:08 AM
To: ‘'; ‘’
Cc: ‘'; ‘'; ‘Mark Hunter'; ‘’
Subject: Environment questions for Undersecretary of the ENB

Dr. POON Kit, Kitty, JP

Under Secy for the Env

2594 6703

Dear Ms Poon

It seems your predecessors did little for HKG’s environment.

We agree we need to burn more gas. The numbers below showing CLP’s decline in gas use from 1999 are horrendous as is the massive increase in coal use.

So Ms Poon, where will the gas come from ? We need 6 billion m3 to produce 50% of what is now generated. More would be better so the additional product could be sold to Guangdong power net to reduce the use of high sulphur backup generators used over the border. Having an MOU is great ; we believe CLP is currently negotiating to take 80% of Daya Bay output instead of 70% but the gas supply will leave a void until the proposed pipeline supply and LNG terminal appear. That means more coal.

Please see our queries below that unfortunately were not read out today on Backchat.

We totally agree with Professor Hedley’s letter below. To use the recommended WHO non developed entry levels adopted in the Democratic Republic of Congo are hardly appropriate for Hong Kong and a sham. It should not even be considered as a starting level.

If this morning’s program had run for 3 hours we would have still been out of time as the emotive statements showed clearly that the people have had enough and Government should act now, not have a consultation as to whether another consultation on the proposed consultation is required.

People want action not words and a non N-A-T-O administration – No Action Talk Only.

Our major environment problem is summed up simply –

– locally burning coal with the ESP in the stacks incapable of catching the PM2.5 emissions unless they fit agglomerators – for the price of 17 days’ coal CLP could add a further 15 agglomerators at Castle Peak and catch the PM2.5. HK Electric is even dirtier than CLP.  Simply – enact a new PM2.5 AQO to at least USA standard if WHO standard is deemed currently beyond reach for whatever reason.  Once you make the AQO standard the power companies will comply. The technology is there. Only now are our local  power companies fitting FGD and NOx burners to meet the 2010 standards.

– local inefficient old diesels – well taxation should get the message across that they need to scrap these vehicle and replace them with at least Euro 4 machines.

Yes we can say we get pollution blown in from PRD for half the year but a vast amount of pollution is created locally and the cure is available.


James Middleton

US$41b gas pact eases Australia, China tensions

Staff reporter and agencies, SCMP

China and Australia have kissed and made up to the tune of more than US$40 billion, overlooking recent tensions to seal a gas supply agreement that is the latter’s biggest deal on record.

PetroChina, the nation’s biggest oil and gas producer, late on Tuesday ordered 2.25 million tonnes of liquefied natural gas (LNG) a year over 20 years from ExxonMobil Corp’s Gorgon plant in Australia in a deal totalling US$41.29 billion.

The deal signals that even as an Australian citizen working for mining giant Rio Tinto languishes in a mainland jail for allegedly stealing commercial secrets from the Chinese, realpolitik is prevailing in both Beijing and Canberra.

China, which received its first LNG cargo in May 2006, plans to build more than 10 terminals on the east coast to meet a government target to double the use of natural gas in five years by 2010.

LNG is natural gas that is chilled to liquid form for transport by ship to destinations not connected by pipeline.

Woodside Petroleum, the operator of the Browse LNG export project in Australia, had already agreed to sell fuel worth about A$45 billion (HK$286 billion) to PetroChina.

“The long-term interests of the two countries will always trump the occasional crisis,” said Michael McKinley, a professor of global politics at the Australian National University. “China’s interest is in obtaining resources at the right volume and price and it’s able to do so in Australia.”

Australian mineral and energy exports to the mainland have been credited with helping the nation of 22 million people avoid a recession, but the country’s growing reliance on China has raised political tensions.

The Gorgon deal brings the value of various mining and energy deals agreed between China and Australia over the past year to more than US$183 billion – more than the gross domestic product of New Zealand.

China now consumes almost 80 per cent of Australia’s iron ore exports by volume, up from less than 60 per cent a year ago and about 20 per cent at the start of the decade.

Fortescue Metals Group, Australia’s third-biggest iron ore exporter, remains in talks with Chinese groups to secure as much as US$6 billion in capital to expand.

The relations between the two nations, which had improved after the election of the Putonghua-speaking Kevin Rudd as Australian prime minister in 2007, have been strained recently. The arrest of the Rio executives and Canberra’s decision to approve the recent visit of exiled Uygur leader Rebiya Kadeer have raised hackles in both capitals, underscoring the vast political divide between the two countries.

But when it comes to energy and minerals, the two sides are on the same wave length – the bigger the deals the better.

“The [PetroChina] deal proves that Rio is just an individual case … and the close trade ties between China and Australia will not be affected,” said Han Xuegong, a professor at CNPC Managers Training Institute in Shanghai.

Officials in both countries have sought to play down the frictions between them.

Australian Resources and Energy Minister Martin Ferguson was quoted as saying the ExxonMobilPetroChina deal was “testimony to the strength of Australia’s continuing trade and investment relationship with China”.

Bloomberg, Reuters

Work on Two HK Gas Pipes to Start in 2011

Cheung Chi-fai, SCMP – Jun 25, 2009

Construction will begin in 2011 on two 20km underwater gas pipelines running from Shekou to Hong Kong to transport natural gas from Central Asia, CLP Power says.

The pipes are necessary to supplement the supply from the company’s gas reserve in Hainan , which comes through an 800km undersea pipe and is expected to start running out in 2012.

The new supply will also enable the firm to boost its use of cleaner gas to generate electricity and reduce air pollution, CLP says.

In a project profile submitted to the Environmental Protection Department, the company said the two pipes were needed to carry the gas from Dachan Island in Shekou to the Black Point Power Station.

Supply from the pipes will be at least 1 billion cubic metres a year, or about a third of the 3.4 billion cubic metres the power station will need by early in the next decade.

Last year, Hong Kong signed a memorandum of understanding with Beijing’s National Energy Administration to extend the second west-east natural gas pipelines from Central Asia to Hong Kong via Shenzhen. The pipe project is led by Petrol China Natural Gas Corporation, which will also invest in a gas storage facility and a liquefied natural gas terminal in Dachan. CLP Power also has about a 25 per cent stake in the terminal and storage project.

A CLP Power spokeswoman said the cost of the project was uncertain.

She said the dual pipe design would ensure a reliable supply.

It is understood the gas supply from eastern Shenzhen to Towngas and Hongkong Electric also comes through dual pipes.

According to the project profile, CLP Power will have to reclaim 2 hectares of land from the sea next to its power station to build a gas receiving station. It is estimated that 950,000 cubic metres of mud will be dredged from the sea bed.

An ecological impact study will be made for the 5km section of pipes within Hong Kong waters. The remaining section would be studied by the project’s mainland partners.

The profile said the pipes would be far from sensitive sites, though there had been sightings of Chinese white dolphin in the area.

HK Gas Terminal On Hold In Green Move

Robin Kwong in Hong Kong, The Financial Times Limited – August 28 2008

The Hong Kong government has backed away from approving a controversial natural gas terminal in an ecologically sensitive area, in what is seen as its first serious attempt to tackle air pollution in the territory in recent years.

China Light and Power, Hong Kong’s biggest energy company, has long argued that it needed to build an HK$8bn ($1bn) liquid natural gas receiving terminal to ensure a stable future gas supply for the territory.

Having more natural gas was also a prerequisite for improving Hong Kong’s air quality, according to CLP, which said it now had to burn more coal to conserve its dwindling gas supplies.

However, environmental activists claim that the terminal, which CLP proposed to build on two small islands on the edge of Hong Kong’s territorial waters, will endanger marine life, particularly the rare pink dolphins and finless porpoises that are Hong Kong’s only indigenous marine mammals.

Edward Yau, environment secretary, said on Thursday that the need for the terminal was greatly reduced after Hong Kong signed a series of energy deals with Beijing that will ensure a stable supply of gas to the territory for the next 20 years.

Under the agreement, the state-controlled China National Offshore Oil Corporation will renew its supply agreement to Hong Kong for another 20 years, and Petro­china will still study the feasibility of supplying gas to Hong Kong from central Asia via pipeline as well as an LNG terminal that Petro­china is planning to build in neighbouring Shenzhen economic zone.

A senior government official, who preferred to remain anonymous, said the government expected that, with this agreement in place, CLP would increase its use of natural gas from a third of its fuel mix to half, thus improving Hong Kong’s air quality. CLP is the biggest polluter within Hong Kong, though the territory also suffers from pollution generated by factories across the border.

Andrew Brandler, chief executive of CLP, said he welcomed the agreement, but the new supply will only “partly fill the gas shortage being faced by us”.

“Imports of LNG will still be needed to meet our full requirements as our need for clean natural gas continues to grow,” Mr Brandler said.

While the new gas supply is still subject to CLP reaching a commercial agreement with CNOOC and Petrochina, the senior official said it was “an obvious choice” over CLP building its own terminal within Hong Kong.

The lack of government support for a Hong Kong terminal also calls into question a 20-year gas supply deal that CLP had initially agreed on with BG Group, the UK gas company, in June. CLP declined to comment on the impact the latest developments would have for the BG deal.

CNPC Starts Building Turkmenistan-China Gas Pipeline

on 30 August, 2007 – nCa News and Commentary

Ashgabat, 30 August 2007 (nCa) — In a simple ceremony Wednesday morning, Turkmenistan and China started building a pipeline that would begin transporting Turkmen natural gas to China in January 2009.

The unveiling of a plaque by President Gurbanguly Berdymuhamedov and welding of two segments of pipe – one emblazoned with ‘Turkmenistan’ in bold letters and the other, with ‘Hytay’ China – symbolized the happy blend of skilful diplomacy and robust pragmatism. It was truly a historic day for both China and Turkmenistan.

The inauguration ceremony took place at the Bagtyarlyk gas territory at the right bank of Amudarya River.

Bagtyarlyk territory, containing at least five gas fields, is supposed to hold more than 1.3 trillion cubic meters of gas, more than enough to feed the China pipe for 30 years at 30 billion cubic meters per annum.

The Chinese experts have independently verified the volume of reserves at Bagtyarlyk.

CNPC will develop some of the fields, and lead the pipeline construction. According to the information available so far, CNPC is doing the project without any investment or expertise from the western companies.

The pipeline – China calls it Central Asia Gas Pipeline – will run some 7000 kilometers. It will have two branches, one going through Kazakhstan and the other through Uzbekistan.

Bagtyarlyk territory was leased to China in July this year. It contains some fields that are already productive such as Samandepe and Altyn Asyr. These two fields, after reconstruction, will provide 13 billion cubic meters per annum for the pipe. The remaining 17 billion cubic meters will come from development of new fields in the contract territory.

In addition to building the pipeline, the CNPC will provide financing and technical know-how for the gas processing and purification facilities, pumping and compression stations and boosters.

TurkmenGaz and CNPC have already signed gas sale-purchase agreement but the price has not been disclosed. Some reliable sources told that the price would be above US $ 100 per 1000 cubic meters.

President Berdymuhamedov said that the pipeline would bring economic benefits to Uzbekistan and Kazakhstan and would encourage regional economic cooperation, stability and friendship.

He said that Turkmenistan had struck a unique deal with CNPC. According to the terms of contract, CNPC has been given operator’s license for exploration and production. CNPC is also allowed to map the contract territory.

Wang Jiarui, head of the International Department of the Communist Party of China Central Committee, CNPC President Jiang Jiemin, and Chinese ambassador in Turkmenistan were present during the ceremony.

nCa Commentary

Now that the construction of China pipe has started, the inevitable will happen in the media. Armchair pundits and myopic commentators will spew their tired babbling that can be divided into three groups:

1. There is not enough gas in Turkmenistan to meet all the commitments
2. When China starts buying gas from Turkmenistan, it will buy less from Russia
3. Turkmenistan is not seriously interested in any other pipelines

As far as gas reserves are concerned, BP is supposed to be the industry gospel. One fine morning BP said that Turkmenistan has 2.8 trillion cubic meters of gas, and everybody said Amen.

The BP figure, apparently taken out of the hat, doesn’t coincide with reality. We have reasons to believe that Turkmenistan has ample reserves; about nine times more than the BP claim.

Turkmenistan asserted during Niyazov’s time that it has 24 trillion cubic meters of gas. And, that was before the discovery of Yolotan.

The circumstantial evidence suggests that Yolotan field alone contains about 7 trillion cubic meters.

Gas reserves are enough and Russia doesn’t need to worry because it would continue to be the main beneficiary of Turkmen gas. The China pipe is restricted to the right bank of Amudarya River and it will not siphon gas form other fields that are currently supplying to Gazprom.

Russia also need not worry that China will buy less from Gazprom if it gets some volumes from Turkmenistan. The Chinese economy can sponge any volumes of gas that producers can send its way. China, realistically the second largest economy of the world, needs all the gas it can find.

Other present and potential buyers of Turkmen gas can also relax. Turkmenistan is following a sectoral approach to divide gas among the buyers.

Right bank of Amudarya River is reserved for China. Trans-Afghan will get gas from Daulatabat cluster. Iran will continue to receive volumes from the general area of Korpeje. The present demand of Russia and the future commitment to Caspian coastal pipeline will be met through all other mainland fields. Trans Caspian, if and when it happens, must depend on volumes from the Caspian shelf of Turkmenistan.