Quake forces China to close energy production facilities

BLOOMBERG NEWS

China ordered coal mines, chemical plants and oil and gas wells to halt production to avoid further casualties after the country’s strongest earthquake in 58 years killed more than 12,000 people.

Companies in affected areas must evacuate their workers and can’t resume output until conditions allow for safe operations, the Beijing-based State Administration of Work Safety said on its Web site yesterday.

Sichuan province, where Monday’s 7.9-magnitude temblor struck, holds about 40 percent of China’s natural gas reserves and accounted for 22 percent of its output in 2006.

The earthquake damaged power plants and transmission lines and may cut the nation’s energy demand. The State Electricity Regulatory Commission, China’s power industry regulator, ordered “24-hour” monitoring at generation and distribution networks and asked utilities to report accidents immediately.

“This earthquake in China may impact demand from power plants being down,” Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago, said in a telephone interview. “Demand for oil was already down in April.”

Chinese oil imports, the world’s third biggest, fell for the first time in 18 months in April as record crude prices discouraged refiners from purchasing oil to turn into fuel for sale below cost. Oil for June delivery rose to a record $126.98 a barrel yesterday.

State Grid Corp. of China, the nation’s largest electricity distributor, said it has started repairs after about 5.5 gigawatts, almost 1 percent of China’s generation capacity, were idled in Sichuan and Shaanxi provinces because plants were disconnected from the national network.

While repairs have started in most areas, the company hasn’t been able to reach “two or three” counties because of damage to roads and telephone links, spokesman Zhang Haiyang said by mobile phone yesterday.

He declined to give a timetable for when the State Grid expects to fully restore the power supply.

China Huadian Corp., the nation’s fourth-largest power producer, said the quake killed and injured a number of people at the construction site of a hydropower plant in Sichuan.

Some Beijing-based companys’ generators restarted after being halted yesterday, China Huadian’s said in a statement.

Two chemical plants collapsed in Shifang city, burying hundreds of people and leaking more than 80 tons of liquid ammonia, the Xinhua news agency reported yesterday. It cited the work safety bureau.

Power outages affected some small coal mines in Sichuan and Shaanxi, said Huang Yi, spokesman of the state work safety bureau in Beijing. No casualties have been reported so far at underground coal mines, he said.

PetroChina Co. adopted “emergency controlling measures” to ensure safety, spokesman Mao Zefeng said. The country’s biggest oil producer restarted an oil products pipeline in western China that was shut for more than 10 hours for checks, said Yu Baocai, general manager at the company’s Lanzhou refinery.