China, the world's second-largest energy consumer, will increase the development and use of coalbed methane (CBM) to meet rising demand for natural gas, said the National Development and Reform Commission (NDRC), the nation's top economic planning body.

The government has drawn up a five-year plan for CBM, the first time such a plan has been formulated for the natural energy.

"By 2010 China aims to produce 10 billion cubic metres of CBM annually," said Sun Maoyuan, president of the China United Coalbed Methane Co ltd (China United), who also took part in the formulation of the five-year plan.

"Our company has drilled nearly 100 CBM wells this year, with 250 more to drill in the next three months, a lot more than last year," said Sun.

China began to drill for CBM in the 1990s. In 2005 3,140 CBM wells were drilled before that the nation had only drilled 6,070 wells in total.

"This year we aim to increase our company's production capacity to 250 million cubic metres, compared with last year's 70 million cubic metres," he said.

Established in 1996, China United has exclusive rights to explore, develop and produce CBM in China, in co-operation with overseas companies.

"This year foreign investment in the sector is expected to increase sharply, rising to a total of about 800 million yuan (US$100 million)," said Sun.

"We have signed co-operation deals with world oil giants such as Shell, BP and ConocoPhillips."

In recent years, foreign groups have invested about US$150 million in around 27 joint-venture exploration contracts with China United, he said.

China's has proven coalbed methane reserves of 36.7 trillion cubic metres. The nation has the third-largest coalbed methane reserves in the world behind Russia and Canada.

CBM, a type of clean gaseous energy, contains similar components to natural gas. Its development could relieve China's reliance on natural gas imports, as well as reducing the number of gas explosions in coal mines.

China has a strategy to use multiple sources of energy, while also developing alternative sources. The strategy aims to increase the proportion of renewable sources of energy in the entire energy structure to around 15 per cent by 2020 from the current 7 per cent.

A number of foreign companies, including US Orion Energy International Inc and Canada's Ivana Ventures Inc, have been actively seeking opportunities in China's CBM sector.

Meanwhile, PetroChina and Sinopec have been increasingly active in producing CBM, in view of limited reserves of natural gas in China.

PetroChina, China's top oil and gas firm, set up a unit to develop alternative fuels last week to secure new energy sources.

(China Daily 09/14/2006 page9)