China to Double CBM Production
A draft of the 12th Five-Year Plan for CBM development stated China is set to produce 21 billion cubic meters of CBM year by 2015, twice the 2010 target, according to the China Securities Journal. The industry is set to release the plan in July.
Target output will include nine billion cubic meters from surface wells drainage and 12 billion cubic meters from underground drainage.
Related departments will offer more preferential fiscal policies to encourage enterprises to explore and use CBM.
In the 11th Five-Year period (2006-2010), China’s CBM output reached 8.8 billion cubic meters and CBM consumption amounted to 3.6 billion cubic meters, lagging far behind the targeted output of 10 billion cubic meters and target consumption of eight billion cubic meters.
“Over the last five years, the central government subsidized RMB 0.2 for mining one cubic meter of CBM and RMB 0.25 for the energy used to produce one kilowatt-hour of electricity. The subsidy standard should be increased,” an unnamed official at the National Energy Bureau was quoted as saying.
Domestic CBM developers suggest raising the subsidies to RMB 0.4 per cubic meter for CBM drainage and RMB 0.35 per kilowatt-hour for CBM power generation, as stated in the draft.
Analysts cited in the report believe the new CBM output target and the forthcoming support policies will benefit leading CBM developers such as PetroChina Co. Ltd., China National Offshore Oil Corp. (CNOOC), and Xinjiang Zhundong Petroleum Technology Co. Ltd.
CBM equipment suppliers including Sichuan Tianyi Science & Technology Co. Ltd. and Jinan Diesel Engine Co. Ltd. will also benefit, the analysts said.
China National Petroleum Corp., (CNPC), parent company of PetroChina, is also accelerating its CBM development.
In 2011, PetroChina plans to reach an output of 600 million cubic meters of CBM and it is targeting accumulated output of four billion cubic meters by the end of 2015, accounting for nearly 20% of country’s CBM output target for 2015.
Meanwhile, CNPC is preparing construction of CBM transmission pipelines. The company reached an agreement at the end of March with Shanxi International Electricity Group to lay a CBM pipeline network in Shanxi province, a major source of China’s discovered CBM reserves.
CNOOC has also upped its CBM activities in recent months, acquiring a 50% stake in China United Coalbed Methane Co. Ltd. (CUCBM) at the beginning of this year.
CUCBM has 27 CBM blocks with proven CBM reserves of 50 billion cubic meters. That provides firm ground for CNOOC’s CBM development, according to the draft.
Despite being a more economically viable energy resource in recent years following technological breakthroughs and rising commodity prices, sizeable risks remain in CBM exploration. For example, a number of domestic CBM developers have abandoned projects halfway because of low success rates in CBM drainage, the draft said.
CBM is a clean and high-quality energy, and is mainly used in civil gas, power generation, industrial fuel, chemical materials, CNG automobiles and gas-fired boilers.
China's CBM resources are estimated at 37 trillion cubic meters, of which 280 billion cubic meters are to be found in Shanxi, Shaanxi and Liaoning provinces.
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