By Wan Zhi Hiong (China Daily)
Updated: 2007-10-22 11:13

Fast lane

The construction of the CBM pipelines is a reflection of the quick development of China's CBM industry, says Huang Shengchu, president of the China Coal Information Institute.

"As a practical and reliable alternative energy source, CBM will relieve China's rising energy demand as well as reduce the number of gas explosions in coal mines," Huang tells China Business Weekly.

China started developing CBM in the 1990s, and the nation's CBM sector has developed quickly since 2004. "This year the nation's CBM production will continue to see double-digit growth, with the production of three billion cubic meters," Huang says. "In 2005 and 2006, China drilled as many CBM wells as it did between 1990 and 2004."

According to CUCBM's Sun, the company will drill over 400 CBM wells this year, equivalent to what it did last year.

"This year our company's CBM production capacity will reach 450 million cubic meters, compared with 200 million cubic meters last year," he says.

China boasts 37 trillion cubic meters of CBM reserves, the third largest in the world, after Russia and Canada. Last year, the National Development and Reform Commission (NDRC), China's top economic planning body, drafted the five-year plan for CBM development.

Under the plan China will increase its annual CBM output to 10 billion cubic meters in 2010. The country will explore and locate an additional 300 billion cubic meters of CBM reserves by 2010. An industrial system will be set up gradually to develop and utilize CBM.

A series of moves have been made to further develop the CBM industry. This year China adopted new preferential tax policies for the industry. Under the new policies, which took effect on January 1, CBM producers will enjoy a full rebate on the value-added tax they pay for CBM production.

In September, China set up the China United Coalbed Methane National Engineering Research Center. With a registered capital of 76 million yuan, the center is co-funded by six companies: CUCBM, PetroChina, Sinopec, Huaibei Mining Group, China University of Geosciences (Beijing) and Beijing Orion Co Ltd.

In the next two to three years the center will develop regulations for the CBM industry, and will develop advanced technologies for the industry with its own intellectual property, says Hu Aimei, the new center's general manager.

However, compared with other countries, such as the US, the world's largest CBM producer, the nation's CBM industry is still at an early stage. Regulations should be better enforced to better develop the industry, Sun says.

China's CBM sector has also seen active foreign investment. Established in 1996, CUCBM has signed 28 contracts with overseas investors on CBM exploration, mining and processing, with foreign investment totaling over US$250 million.

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