The Weir Group PLC and Shengli Oilfield
Highland Petroleum Equipment Co. Ltd. (“Highland”) announce the
formation of a joint venture to provide high-pressure well service
pumps and related flow control equipment to the developing shale
gas industry in China.
The JV is expected to commence operations in
the first half of 2011, subject to regulatory approvals. It
will be owned 60% by Weir and 40% by Highland and will be based in
Dongying, Shandong Province, China. The JV will build on the
success achieved by Weir SPM, a leading manufacturer of specialised
products for the oil and gas market which has benefited from the
development of shale gas production in North America.
Commenting on the new JV, Weir’s chief
executive, Keith Cochrane, said: “The JV with Highland
presents a great opportunity for Weir SPM to apply its expertise in
well service pumps and flow control equipment to the accelerating
Chinese unconventional gas market. Our partnership with
Highland, with its extensive customer relationships and market
knowledge, will be a key enabler for production from China’s shale
gas reserves.”
Yang Xianping, chairman of Highland,
added: “We are delighted to be working with Weir and are
excited by the opportunity to be associated with the Weir SPM
technology and brand, renowned globally in the oil and gas
arena. We look forward to many years of success with our new
partners.”
Weir anticipates investing US$6.2m (£3.9m) in
the JV during its first two years of operation.
Contact details:
The Weir Group PLC
Helen Walker, Public Relations Manager
Tel. 0141 308 3739 (Mobile: 07789 032296)
Maitland Tel. 020 7379
5151
Suzanne Bartch
Rowan Brown
NOTES FOR EDITORS:
Shale gas
Shale gas is an “unconventional” source of
natural gas, released from rock formations by hydraulic fracturing,
a technology centred on specialised pumps of which Weir’s SPM is a
leading manufacturer.
Weir SPM
Based in Fort Worth, Texas, Weir SPM’s product
offering centres on high-pressure well service pumps and related
flow control equipment such as valves, chokes, manifolds, swivel
joints and connectors which operate in abrasive, high-wear
environments. Customers include manufacturers of well service
equipment, well service operators, drilling contractors, oilfield
supply houses and integrated oil companies. Further
information on Weir SPM is available from http://www.weiroilandgas.com/
Highland
Shengli Oilfield Highland Petroleum Equipment
Co. Ltd. was established in 1992 and is located in Dongying,
Shandong Province, China. The company offers an extensive
range of drilling and production equipment and services mainly for
the oil and gas industry. Major customers include Sinopec,
CNOOC and CNPC. Further information on Highland is available
from its website http://en.chinahighland.com/
Weir in China
Weir has been developing its footprint in
China over a number of years. It has two wholly owned
subsidiaries in Suzhou, Jiangsu Province – one focused on the
mining industry and the second in the power sector. In
addition, Weir has a sourcing operation based in
Shanghai. Pump and valve equipment is also supplied
from a number of Weir’s western based companies to major projects
including China’s extensive new build nuclear programme.
Shale gas in China
China, which is heavily dependent on imported
oil and gas, hopes to replicate with its own shale gas reserves the
success seen in US unconventional gas production:
· The International
Energy Agency estimates China’s shale gas reserves at 26 trillion
cubic metres. (At the end of 2008, proven shale gas reserves
in the US were reported by the Energy Information Administration to
be 32.8 trillion cubic metres.)
· The Strategic
Research Centre for Oil and Gas of China’s Ministry of Land and
Resources set a goal in early 2010 to locate one trillion cubic
metres of recoverable shale gas reserves, build 15-30 billion cubic
metres of production capacity and produce 8-12 percent of China's
natural gas from shale gas wells by 2020.
· The Communist
Party of China Central Committee's October 2010 proposal for
China’s 12th 5-year plan includes a target to “nurture and develop
seven new strategic industries with favourable policies in the next
five years”. The industries include new energy, and according
to Chinese media reports, China has widened the scope of energy
sources covered by the 5-year plan to include unconventional
gas.
· China National
Petroleum Corporation (CNPC) aims to produce 500 million cubic
metres of shale gas by 2015.
· Sinopec aims to
increase its unconventional gas production capacity to more than
2.5 billion cubic metres annually by the end of 2015.
Sources: International Energy Agency,
Energy Information Administration, Financial Times, Reuters, CPC
Central Committee’s Proposal for Formulating the 12th
Five-Year Program for China’s Economic and Social Development
(2011-2015), company websites
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