Wen-23 gas storage facility making progress, says Sinopec

China Petroleum and Chemical Corp, or Sinopec, said that total gas storage at its Wen-23 underground storage in Central China has reached 6.16 billion cubic meters, with an effective working capacity of 1 billion cubic meters and the facility will be able to effectively meet the ensuing winter fuel demand.

The Wen-23 storage, built from a depleted gas field in the central province of Henan, has a total designed storage capacity of 10.4 bcm, including 8.4 bcm under phase one. Once completed, it will be connected to several natural gas lines operated by Sinopec, such as the Yulin-Jinan line and Ordos-Changzhou line that connect gas fields in North China's Ordos basin with consumers in the eastern provinces.

Peak load regulation capacity has reached 13 million cubic meters per day, and will be able to satisfy gas demand for 26 million households, it said.

Analysts said the Wen-23 construction signaled a step up for underground storage expansion. Currently there are 10 such projects under construction and around 20 in the planning stages.

"The construction of underground gas storage facilities slowed down between 2014 and 2018. Wen-23, the biggest UGS in China after 2013, was commissioned in 2019," said Li Ziyue, an analyst with BloombergNEF.

"As gas demand surges in China with soaring natural gas import tendency of over 40 percent, the need to accelerate the development of underground gas storage becomes more urgent," she said.

"Although the current working capacity of underground gas storage in China accounts for about 3 percent to 5 percent of the total gas consumption, it is much lower than the international level of 12 percent. The government has planned to expand underground gas storage capacity to cover more than 10 percent of China's gas demand by the end of this year."

Li further said while the target of 10 percent might not be achieved, the effective working capacity of underground gas storage, which is currently more than 10 bcm, is expected to reach 14.8 bcm by this year-end and 30 billion cubic meters by 2030.

China has been stepping up the construction of underground gas storage facilities to meet increasing demand during the peak consumption period in winter in recent years. While demand for natural gas will surge sharply over the cold winter and spring months, Li estimates that gas shortages are unlikely this heating season.

To ensure sufficient gas supply, the country's oil majors are also ramping up local oil and gas output, adding thousands of wells at oil basins, shale rocks and deepwater fields nationwide.

According to Sinopec, Wen-32 is the underground gas storage with the most working gas capacity and peak load regulation capacity in the eastern part of China. The facility will largely meet gas demand from Beijing, Tianjin, Hebei, Shandong, Henan and Shanxi, it said.