The Scenario Analysis of Shale Gas Development on the sufficiency of pipeline network in China by applying natural gas pipeline optimization model PhD Candidate Meng XU Prof. Alexis K H LAU Prof. William F BARRON Prof. Ming XU Division of Environment School of Nature Resources and Environment University of Michigan 5 th IAEE Asian Conference 16 th Feb, 2016
1.Background:Shale Gas is a Bridge Towards Lower Carbon Future U.S. Fig. 1 Background Objective Scenarios Methodology Result Supplies of conventional gas appear to have peaked Lower carbon fossil fuel Fig. 3 China The world's largest shale gas resources. "2020 Energy Strategy Planning" 2012 2020 From 5% to 10% 2 From 71% to 62% Source: U.S. Energy Information Administration, Annual Energy Outlook 2014. Fig. 4 Fig. 2 Gas production
3 Water Scarcity may constrain shale gas development in China Fig. 5 Average Annul Precipitation with Key shale basins in China Junggar Basin Songliao Basin Prospective. Tuha Basin Tarim Basin Most Prospective Qaidam Ordos Basin Subei Sichuan Basin Jianghan Others: Less Prospective Basins Source: EIA Water precipitation map source: Wikipedia http://commons.wikimedia.org/wiki/file:average_annual_precipitation_in_china%28english%29.png Author: XU, Meng The most prospective shale : Sichuan Basin
4 Gas Pipeline extent and capacity limitation in China Fig.7 U.S. Natural Gas Pipeline Network, 2009 Fig. 6 China Natural Gas Pipeline Network, 2012
5 2. Objectives 2.1 To answer the question that whether the pipelines have sufficient capacity to transmit the gas. 2.2 To quantitatively access gas transmission through trunk pipelines across provinces. 2.3 To provide implications for gas pipeline network expansion and gas development in China.
6 3 Scenarios of shale gas development in China The three scenarios: (unit: billion cu.m.) 2020 Optimistic 60 Twelfth-five year plan for 2020 ( Total natural gas production in 2010) Medium 25 IEA s Projection Conservative (no growth) 6.5 Twelfth-five year plan for 2015
7 4. Methodology Parameters for the model a i : The supply capacity of station i (m 3 ) d i : The supply price of gas from i (yuan/m 3 ) (Prices differ from different gas sources)
8 4. Methodology j Parameters for the model b j : The demand quantity of j (m 3 ) C k : The capacity of the pipeline k k c ij : The cost of transmitting gas through pipeline k (yuan/m 3 ) (based on the length of pipeline k)
4. Methodology: The Natural Gas Pipeline Optimization Model 9 Demand Gap: the quantity of demand j can t be met Gas Transmission Cost; Supply Cost from i i : 118 supply stations j : 118 demand stations k : 191 pipelines Decision variables: x ij : Gas transmitted from supplier i to demand j (m 3 ) y k : Transmitted gas through pipeline k (m 3 ) Parameters: ep j : The demand gap of j (m 3 ) c ij : The cost of transmitting gas from i to j (yuan/m 3 ) d i : The supply price of gas from i (yuan/m 3 ) a i : The maximum supply capacity of i (m 3 ) b j : The demand quantity of j (m 3 ) c k : The cost of transmitting gas through pipeline k (yuan/m 3 ) δ ijk : 1 if the gas transmitting from i to j passes through pipeline k, 0 otherwise C k : The capacity of the pipeline k (m 3 )
5. Result Fig. 9 10
Fig. 10 11
Implications To substitute massive LNG import, the trunk pipeline network in China requires expansion. Pipeline expansion is required under the medium and optimistic supply of shale gas: Trapped Gas in the Optimistic Scenario The segment of Sichuan-East: from Sichuan basin towards Shanghai The segments of West-East No.1: from Shaanxi to Beijing and Shanghai respectively If the pipeline constraint is overcame: Quantity (billion cum) Sichuan Basin 3 5% National 49 (4.1 LNG) 81% China could reduce 24% of its dependency on LNG imports -under the optimistic scenario in 2020. Ratio of the 60 bcm of Shale Gas Expansion of the "West-East No.1" trunk pipeline from Shanxi to Beijing, to fill Beijing s gas demand gap. Transmitting massive coal to gas from west to east would be inefficient and not necessary. 12
13 Conclusion China have quite high incentive to develop shale gas. The less developed pipeline network could be an major constraint for shale gas development. The multi-objective pipeline optimization model is built to quantitatively access gas transmission across provinces under the three scenarios of shale gas development. Pipeline network is not sufficient under the medium and optimistic supply of shale gas.: Segment expansion of the Sichuan-East pipline: from Sichuan basin towards Shanghai Segment expansion of the West-East No.1 pipeline: from Shaanxi to Beijing and Shanghai respectively
Thank you! 14
Shale gas exploratory locations: Sichuan Basin 15 Fig. 10
16 Transportations of natural gas through pipeline network in China 30 Conventional Natural Gas Import from NorthWest: Turkmenistan, Kazakhstan North: Russia Southwest: Burma 32 Qinghai From 2014 each province (except Tibet) will have access to at least one strategic pipeline that can deliver over 10 bcm natural gas per year. Forecasted transportation of shale gas: Sichuan, Chongqing Southwest China : Hubei, Anhui, Zhejiang, Jiangsu, Shanghai; (In short term) Hunan, Jiangxi, Fujian, Guangdong (In long term) Yunnan Guizhou, Guangxi Fig. 10 China Gas Pipeline Map (by 2012) Xinjiang 12 9 Operating Natural Gas Pipeline Transmission Flow (10 bcm/year) Gansu Inner Mongolia Chongqing Sichuan Guizhou Shanxi Shannxi Guangxi Hunan Henan Hubei Hebei Beijing Zhengzhou Anhui Guangdong Tianjin Jiangxi Shandong Jiangsu Fujian Nanjing Xiamen Shanghai Zhejiang Heilongjiang Non-operating Natural Gas Pipeline Transmission Flow (10 bcm/year) 41 39 Unit: billion cubic meter Liaoning http://www.chinagasmap.com/theprojects/images/bgpic-pipeline.jpg 15 38 Haerbin Jilin
17 To Get the pipeline connectivity δ ijk Compute ArcGIS Network the shortest Analyst route provides from network-based origin i to spatial destination analysis. j (Network Analysist in ArcGIS)
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Distribute provincial gas demand to each gas station (bj) 19 Polygons(County) Points(Center) Nearest Gas Station Based on population distribution Data :2010 Population Census in County Level (Source: China data center, University of Michigan) 19 19
20 Transmission Cost Natural Gas Transportation Tarrif Pipeline length 2008 2010 km CNY/1000 m 3 CNY/1000 m 3 <50 36 116 50-100 41 121 101-200 47 127 201-250 58 138 251-300 63 143 301-350 68 148 351-400 74 154 401-450 79 159 451-500 85 165 > 500 unit price same to 451-500 Source:NDRC Pipeline Matrix Destina Length Transmission Pipline_ID Origin tion (km) Cost (CNY/m 3 ) 1 20 57 193 127 2 56 20 232 138 3 21 8 360 154 4 75 21 398 154 5 55 8 111 127 6 23 22 79 121 7 59 23 216 138 8 22 9 81 121 9 58 10 211 138 10 77 7 413 159 c ij : The transmission cost http://www.runfargas.com/article/showarticle.asp?articleid=748
Cost of gas supply (d i ) Price of gas from the three categories 21 Categories Price Unit CNY/1000m 3 Source http://www.nsd.edu.cn/cn/userfiles/ot her/2012- Ex-plant 1150.00 yuan/1000 m3 2010 1150.00 07/2012072619193569575249.pdf Gas Import through pipelines Tukuministan/Kazakstan 200.00 dollar/1000 m3 2014 1231.62 shehui.daqi.com/article/3597889.h tml Russia East Line 380.00 dollar/1000 m3 2014 2340.08 Europe Price Burma 2.68 yuan/m3 2680.00 http://www.yicai.com/news/2014/ 09/4021549.html LNG Import 14.40 dollar/mmbtu 2014 2158.93 http://www.ferc.gov/marketoversight/mkt-gas/overview/ngasovr-lng-wld-pr-est.pdf The Gas station Matrix FID City_Name Supply Demand Price(CNY/m 3 ) 1 Dingyuan 0.00 3.76 2 Yizheng 0.00 3.59 3 Huaiyang 0.00 4.98 4 Xuedian 0.88 2.88 1150.00 5 Pizhou 0.00 4.01 6 Qingshan 0.00 4.39 7 Jinan 0.00 2.99 8 Beijing 0.00 21.83 9 Qinhuangdao 4.14 0.53 2158.93 21 21
22 Connectivity (Shortest route from i to j) δ ijk From origin i to destination j, there are k pipelines in total. δ is1 if the gas transmission pass pipeline k, otherwise 0. OriginsID DestinationID Pipeline_FID δ 1 17 167 1 1 17 168 0 1 17 169 1 1 17 170 1 1 17 171 0 1 17 172 0 1 17 173 0 1 17 174 0 Methodology: Best Route computed by GIS from each origin to each destination 1 17 175 0 1 17 176 0 Column size: 118*118*191= 2,659,484 Matrix size [ 2,659,484 * 4 ]