By Linda Hsieh, managing editor
Comparing the state of the Chinese shale gas industry today to the state of the US market back in 2005 to 2006, Honghua Group Chairman and CEO Zhang Mi said he believes the Asian giant is at a turning point. Industry is ready to step up the scale of shale development in terms of technology and equipment, but a good government policy will be needed to support operations, he said. “Today’s China is like the US was 10 years ago. It’s at the cusp of a shale gas boom – or actually, I think it’s already booming,” Mr Zhang told DC during an exclusive interview at the 2014 Offshore Technology Conference (OTC) in Houston in May. Honghua also signed a three-year agreement at OTC for GE Power & Water’s Distributed Power business to supply its Waukesha VHP gas engines to power shale drilling rigs in China.
“We think it’s really going to be a trend in China to provide much more cost-efficient and cleaner power-generation solutions, and we want to become the pioneer in the Chinese market,” he said. The Waukesha gas engines will be fueled by on-site field gas or with commercial-grade gas to generate 2.8 to 3 megawatts of on-site power. The engines provide options to run almost any gaseous fuel from 950 to 2,600 BTU, including hot field gases, commercial-grade gas, LNG, CNG and up to HD-5 propane, according to GE. Waukesha units are being shipped to China, and the company expects the first pilot rig to begin operations in September.
Mr Zhang said he believes that as many as 100 rigs will be drilling for shale gas in China by year-end, mostly in the Sichuan Basin. This development will be critical as natural gas takes on a greater role in the worldwide energy mix and has been a significant motivator for Honghua to develop natural gas-supplied power generation technologies. For example, in 2012 the company introduced the design for its integrated shale gas drilling system that replaced diesel with gas. “The core objective is to eventually establish centralized natural gas power-generation solutioons and to provide much cleaner energy to the field and the drilling site,” he explained. Such centralized systems would be able to power 10 to 20 pad-drilling sites simultaneously, he added.
Similar to the switch to natural gas for drilling, Mr Zhang also foresees the same trend for hydraulic fracturing equipment in China. “Our design will be using gas engines to drive those equipment so the whole application will become much more environmentally friendly and more cost-effective.” Honghua said it would rely on outside technologies, through partners such as GE, to realize the centralized power distribution system.
In the US, as well, he sees the switch to natural gas for drilling applications as inevitable, with bi-fuel kits being a good bridging solution. “Right now the reason that a lot of existing drilling applications are using bi-fuel instead of replacing their current existing diesel engines with gas engines is the cost is very high. It’s also a step-by-step process – you can’t replace everything at once. But with the growth in the natural gas supply, eventually natural gas providing power generation will be the final solution.”