Coalbed methane sector revs up

Producers are motivated to increase investment and output to meet nation's surging demand for gas

China's coalbed methane industry has lagged behind developed countries in the past decade in terms of exploration and development, but industry insiders said the country's surging gas demand and ongoing industry reform will accelerate the sector's commercial development in the coming years.

China's coalbed gas reserves total an estimated 36.8 trillion cubic meters, the third-largest in the world after Russia and Canada, according to the National Energy Administration.

The majority of China's coalbed methane resources lie in the Qinshui Basin of Shanxi province and the Ordos Basin in the Inner Mongolia autonomous region. Together, these two basins contain around one-third of China's total coalbed methane volume and 93 percent of discovered geological reserves.

Commercial-scale coalbed methane production in China started more than a decade ago. Production increased considerably in around 2008, but remains significantly lower than in developed economies such as the United States and Australia.

Chinese oil and gas majors have been actively cooperating with international players to further tap the massive potential of these resources.

For example, China National Petroleum Corp, the nation's largest oil and gas producer by domestic annual output, is working with Royal Dutch Shell and Greka Group.

In 2017, China National Offshore Oil Corp, the country's largest producer of offshore oil and gas, issued a tender inviting domestic and foreign companies to bid for 10 coalbed methane blocks in the Ningxia Hui autonomous region, and Shanxi, Shandong and Anhui provinces, covering 2,173 square kilometers.