China’s coalbeds an unconventional resource for natural gas

After more than a century ripping out its insides to supply coal to the rest of the country, the heavily mined and polluted province of Shanxi in northern China is in the midst of a gas boom.

Under the spray of the Yellow River near the city of Jincheng, “nodding donkeys” bob in lines that stretch to the horizon, hitched up amidst precious farmland to feed on the gas streaming through the coal seams below. Gleaming white storage tanks tower over the highways and dozens of drilling rigs dot the cliffs and valleys, some near the famed ancient cave settlements of Shanxi.

Gas output from the coal seams is rising fast and is set to hit 8 billion cubic meters this year, up a half from 2011 – emerging from nowhere just six years ago to provide China with a cleaner, home-grown alternative fuel for the future.

China is investing $16 billion to double output again by 2015. Beijing wants coal seam gas output as high as 30 bcm by 2020, which would be 15 percent of China’s total gas production, up from 5 percent of the total last year.

Beijing plans to double the share of natural gas in its energy mix by 2015 and reduce coal’s role in a drive to ease pollution and slow greenhouse gas emissions. China will import more gas, but it also aims to boost output from domestic natural gas fields as well as unconventional sources such as coalbeds and shale…

CBM could easily supply 15 percent of China’s total gas requirements within a decade, Randeep Grewal said. Last year, CBM output was 5.3 bcm, just over 5 percent of China’s total gas output of 102.5 bcm…

The increased domestic supply is a boon to China’s government as it will help temper imports. Beijing is facing a rising gas bill as it builds pipelines from central Asia or liquefied natural gas (LNG) terminals along the coast to help meet its ambitious targets to increase the role of gas in fuelling China’s economy…

With China’s increasingly safety-conscious coal companies obliged to remove gas from their mines, exploiting CBM is also better for the environment than letting the methane – a greenhouse gas 20 times more potent than carbon dioxide – enter the atmosphere.

“It means somebody else will pay for degassing coal and will profit from it – it is a symbiotic process,” said David Creedy, coal expert with Sindicatum Sustainable Resources in Beijing…

CBM’s biggest unconventional competitor is potentially shale gas. If it were to develop quickly, China’s shale gas output could price some CBM out of the market.

But for now that looks unlikely, giving CBM developers a window of opportunity. Unlike CBM, developers have yet to adapt shale gas production techniques to China’s geology and there is to date no commercial shale gas production in China, even though the U.S. government estimates China sits on the world’s biggest shale gas reserves.

Nat Gas remains the cheapest and easiest conversion technology for a technology built on fossil fuel. I’ve pointed this out in a demonstration post within the last week.

Since China is in early days of sorting out their next 5-year plan, right now – it seems likely this wil be one more technology they will be able to implement for both cleaning up their environment and lowering costs. Two motivations which obviously don’t concern American politicians at all.