Coalbed methane sector revs up

The Qinshui Basin alone contains more coalbed methane production wells than the entire state of Queensland in Australia, but US and Australian basins have much higher single-well production rates than the Qinshui and Ordos basins, Carpenter said.

Many developed economies, including the US, Germany and Australia, started to explore coalbed methane earlier, and have now established a mature related industry, according to Sun Maoyuan, a consultant from the National Energy Administration.

China, as a relatively late starter, has also accumulated valuable experience in its decades of exploration and research.

Policy support

The central government has released preferential policies to encourage further exploration of coalbed methane.

The Ministry of Finance has exempted import tariffs and value-added tax on certain coalbed methane exploration and extraction equipment and parts from 2016 to 2020.

However, "it will still be challenging to achieve the country's 2020 goal", said Sun, urging local governments to come up with more supportive measures.

Randeep S. Grewal, chairman and CEO of Greka Group, said it usually takes 10 to 15 years for a country's coalbed gas technology to mature, and China's pace is consistent with the world's developed economies.

In addition, the exploration of coalbed methane will also help to ease China's high dependency on oil and gas imports, and to ensure energy security.

According to the CNPC Economics and Technology Research Institute, China's reliance on imported oil and gas has been mounting in recent years.

The country is now the biggest crude and gas importer in the world, importing 440 million metric tons of crude oil in 2018, a year-on-year increase of 11 percent, and 125.4 billion cu m of gas, a year-on-year increase of 31.7 percent.

The country's foreign dependence ratio for oil and gas reached 69.8 percent and 45.3 percent respectively, and is expected to continue rising in 2019, the institute noted.

The central government has identified 11 cities in Shanxi and Shaanxi provinces, which all feature heavy industry and widespread use of substandard coal, as key areas in which to reduce air pollution by increasing the use of gas in their energy mix.

Coal represented 84.6 percent of Shanxi's energy mix in 2017 and local authorities plan to reduce the share to 80 percent in 2020 in a bid to fight pollution.

China recently announced plans to build two large coalbed methane production areas in coal-rich Shanxi - one in the Qinshui Basin and the other in the eastern Erdos Basin. Each basin has recoverable gas reserves of 1 trillion cu m, with a combined annual production capacity of 8.3 billion cu m.

By 2020, Shanxi plans to raise its annual coalbed gas output to 20 billion cu m and transport 6 billion cu m of gas from the two bases to other parts of the country through pipelines.

According to Na, coalbed methane development was previously held back by exorbitant pipeline tariffs, mining rights disputes overlapping with the coal mining industry, and lengthy project approval processes.

"With these barriers gradually being lifted or eased by ongoing market reform and further technological breakthroughs, producers are motivated to increase investment and output to meet the surging gas demand," she said.

zhengxin@chinadaily.com.cn