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Yantai Gas Pipeline for Door-to-Door Service

H. Sterling Group is also working with investors in the region to construct a gas pipeline linking the Yantai LNG terminal with large gas end users in the region. Yantai Gas Pipeline project will encompass over 50 million people across six cities and industrial hubs in Shandong, the biggest industrial province in northern China.

This gas pipeline will be 540 kilometers in length, 1219 mm (48 inches) in diameter, and operate at a pressure of 10 MPa, delivering over 23 billion cubic meters of gas per year directly to gas power plants, manufacturing industries, petrochemical plants, municipal gas networks and various other users in the region, helping Shandong to achieve its energy transition from coal to gas.

YANTAI NATURAL GAS PIPELINE

First Section to Be Built

Due to an especially high shortage of gas in Penglai, Shandong, the Penglai branch pipeline will be built first. As the gas market in Shandong develops, other branch pipelines will follow, each connecting to stations that will be reserved for them. The Penglai branch will extend from the main transmission line to the Penglai terminal, with a length of 20.60 kilometers, a diameter of 406.4 millimeters (16 inches), and an operating pressure of 6.3 MPa. This branch line will transport 800 million cubic meters of natural gas annually. This pipeline will complement the existing resources of the three major Chinese NOCs in Shandong, helping to close the supply gap in Penglai. The pipeline is scheduled for operation in early 2022.

Downstream Markets

Shandong's energy mix has long been dominated by coal. Due to lack of infrastructure, natural gas only represents 0.8% of primary energy consumption in Shandong, far behind other coastal provinces. Coal has been the main energy resource in Shandong for decades, causing increasingly serious pollution in many areas of Shandong. Shandong is one of the fastest-growing provinces in terms of GDP in China. With China’s energy transition and increasing environmental regulations, there will be significant natural gas demand in Shandong.

 

According to the government document, Natural Gas Storage Facility Construction Plan for Shandong Province: 2018-2020, natural gas demand in Shandong in 2020 will be 25 billion cubic meters pear year; by 2030, this number will be 56.3 billion cubic meters. At that time, Shandong Province will become the second largest natural gas market in northern China after the Beijing-Tianjin-Hebei region.

Demand forecast by city along pipeline (unit: bcm)

Future Development

Increasing gas demand, developing infrastructure, and guiding policies are all driving a positive trend for gas development and strong integration between production, supply, and distribution within Shandong. By 2022, Shandong will have 9,000 kilometers of pipeline, reaching all county-level cities across the province. By 2030, over 10,000 kilometers will have been constructed, connecting all townships across the province. According to the government document, The Development Plan for Oil and Gas Industries in Shandong Province from 2016 to 2030, demand for natural gas consumption is growing rapidly. However, the province is currently underserved by the national gas network, leading to a large supply gap that continues to increase annually.

Shandong is currently leading China in terms of pipeline construction, and an initial framework of oil and gas pipelines has already been established. However, without effective planning, pipeline transmission capacity remains well below demand. Interconnection and resource sharing are not fully realized, creating regional disparities and distribution imbalances. This has provided opportunity for future development of Shandong’s pipeline network.

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