At the Zhao Dong oil fields, gas is produced as a natural by-product with the oil. Prior to the gas sales pipeline project, any associated gas was used as a fuel in gas turbines to generate electricity for use on the platform and any excess gas was then flared. After successful discussions with PetroChina about how a gas pipeline to shore could be beneficial to all partners and to the environment, a gas sales agreement was signed in February 2010.
Project engineering was a co-operative effort between ROC and PetroChina; with PetroChina installing the gas pipeline and ROC operating the export facilities on the platform. This project has eliminated the need to flare gas during normal production operations. We expect that this will lead to an approximate 50% reduction in Zhao Dong oil field emissions in 2011. Export of gas to the local onshore gas grid commenced on 9 December 2010. During Spring 2011, a compressor will be installed which we expect will increase gas export volumes. The required modifications to compress, meter and export this gas cost ROC US$1.6 million.