Coalbed methane sector revs up

High ambitions

These efforts are in accordance with the country's policy to boost underground mining safety, to increase clean energy supply, and to cut greenhouse gas emissions.

By 2020, China plans to have 420 billion cu m of newly added proven coalbed gas reserves and to build two to three large coalbed gas production bases. By that time, annual coalbed methane output is expected to reach 24 billion cu m, accounting for 13 percent of the country's natural gas production, according to the National Energy Administration.

After years of development, China's coalbed gas industry is now entering a fast track, with mature drilling technology and infrastructure construction, said analysts.

Figures from Bloomberg New Energy Finance showed that China produced more than 9 billion cu m of coalbed methane in 2017.

According to Na Min, a senior analyst for oil and gas at Bloomberg NEF, the country's coalbed methane production capacity needs to almost triple by 2020 to meet the government's 24 billion cu m annual production target, as set in the 13th Five-Year Plan (2016-20).

"The prospects for coalbed methane in China are bright, as the country is encouraging the consumption of natural gas to replace coal in a bid to fight pollution, and gas demand growth in northern cities will mean sales opportunities for coalbed methane producers," Na said.

According to an industry forecast from Allied Market Research, high exploration and extraction rates in emerging countries, including China, will drive market growth until 2023. It estimated China's coalbed methane sector will grow at a maximum average rate of 11.6 percent annually in terms of the output value.

China's lower coalbed methane output is not the result of a smaller development scale compared with the US and Australia, but the result of very low single-well gas production rates, according to a report by Chris Carpenter for the Journal of Petroleum Technology.

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.