Step on the gas

Dazhou, a city in the easternmost part of Sichuan province, will make full use of its natural gas reserves to build itself into Asia's largest sulfur producing base by the year 2010. That's when its annual sulfur output is expected to surpass 4 million tons, according to Dazhou Mayor Luo Qiang.

Located at the juncture of Sichuan, Hubei, Shaanxi provinces and Chongqing municipality, Dazhou, which has easy transport facilities, boasts natural gas reserves of 3.8 trillion cu m, of which 660 billion cu m are proven.

"Dazhou, whose annual natural gas output is expected to reach 20 billion cu m in 2010, is one of the natural gas fields in China with the most promising development potential after the Tarim and Erdos natural gas fields," Luo tells China Business Weekly.

Dazhou's natural gas has high sulfur content, and in some of its natural gas wells the content of sulfurated hydrogen from which sulfur produced is more than 17 percent.

In recent years, Dazhou, hoping to become western China's natural gas, energy and chemical industrial base, has attracted domestic and overseas firms interested in its natural gas resources.

Earlier last month, a Chinese subsidiary of the Chevron Corp announced the opening of an office in Dazhou to support the US oil giant's local natural gas operations. The move came after a 30-year production sharing contract signed between Chevron and PetroChina, the listed subsidiary of China National Petroleum Corp (CNPC), the country's biggest oil and gas producer, in December.

In Dazhou, Jim Blackwell, president of Chevron Asia Pacific Exploration and Production Co, says the contract became effective in February.

The contract, for the development of a 1,969-sq-km natural gas field in the onshore Sichuan Basin, made the CNPC-Chevron cooperation the largest inland exploration project by a foreign firm in China.

According to Chevron, the company and CNPC expect to build two sour gas plants with a throughput capacity of approximately 740 million cubic feet of natural gas per day. The gas field has natural gas proven reserves of 175.97 billion cu m.

Because demands exceed production, sulfur prices have been steadily on the rise in the world market, according to Qi Yan, executive director of the China Sulfur Industrial Association.

"In January last year, my company spent less than 2,000 yuan importing 1 ton of sulfur, but it has to pay 5,800 yuan for the same amount of sulfur at present," says Tang Shenghui, an official with the Yongli Chemical Industrial Shareholding Co Ltd in Zhuzhou, Hunan province, in the National Sulfur-related Chemical Industrial Forum held recently in Dazhou.

China's annual sulfur output is 1 million tons, while its domestic consumption exceeds 10 million tons. Each year, the country has to import about 9 million tons from abroad.

"Rising prices in the international sulfur market have had an adverse effect on many industrial sectors in China, and development of sulfur in Dazhou will be significant for the country's sulfur-related chemical sectors," Liu says.

Sulfur is indispensable to production of phosphate fertilizer, rubber, pesticides, medicine, food additives and lubricating oil.

"Dazhou has built a natural gas, energy and chemical industrial park with an area of 30 sq km and the sulfur-related sector has become an important component of the park," Luo said.

"When construction of desulfurizing plants invested by China Petroleum and Chemical Corp and CNPC is finished, Dazhou's annual sulfur output will surpass 4 million tons in 2010, accounting for half of the country's total," he said.

Soaring energy demand and the government's support of natural gas use has boosted China's natural gas development.

The country has experienced double-digit growth in natural gas output and consumption in each of the past three years.

According to statistics of the China Petroleum and Chemical Industry Association, China produced 69.31 billion cu m of natural gas in 2007, up 23.1 percent from a year earlier.

(China Daily 06/16/2008 page10)