OREANDA-NEWS. December 16, 2014. Sino Gas & Energy Holdings has announced that gas sales arrangements for the pilot testing programme have been finalised and gas sales have commenced from the Sanjiaobei and Linxing blocks, in the Ordos Basin, Shanxi Province, China.

Gas production has commenced through the Sanjiaobei central gathering station from both Linxing and Sanjiaobei pilot wells.

“Achieving first gas from our Ordos Basin assets is a significant milestone and today represents a very positive inflection point in Sino’s future as we transition into a full-cycle exploration and production company, supplying low-cost gas to China’s rapidly growing domestic market,” said Glenn Corrie, Sino Gas CEO.

Initial constrained production has commenced at approximately 3.5 million standard cubic feet (MMscf) per day from a pool of 16 pilot wells and is planned to be ramped up in a safe and efficient manner towards full plant capacity of 8 MMscf/day in 2015.

Construction on the Linxing central gathering station continues to make good progress and the facility is on-track to be commissioned in mid-2015 with a capacity of around 17 MMscf/day, bringing the total pilot program capacity to around25 MMscf/day.

Data from the pilot production will continue to improve the understanding of long-term reservoir performance for optimising full field development and overall development plan submissions.

Gas sales arrangements for the sale and purchase of gas from the Linxing and Sanjiaobei blocks have been signed with Lin County Jiahao New Energy Company Limited, a Shanxi industrial and commercial customer, for distribution via the Yulin-Jinan regional pipeline.

“Our focus can now turn to maximising production from the existing facilities and advancing the build-out of additional capacity,” added Corrie. “The gas sales arrangements that we now have in place are very attractively priced and further underpin the commerciality of our gas resource. I am very encouraged that the recent National Development and Reform Commission (NDRC) price increases have been applied to our contracts this quickly, highlighting the government’s continued support in promoting the development of new domestic sources of gas supply.”

“I would like to acknowledge the effort and dedication of the SGE leadership and project team in achieving this landmark milestone. We sincerely value the ongoing support of our PSC partners, local governments and communities as well as our customers in making this project a success. This is significant step in unlocking Sino Gas’ large, cost competitive resource base and we look forward to continuing to play a role in meeting China’s growing energy demands with indigenous gas supply.”