China’s Coalbed Methane: Recovery & Utilization Must Improve

By Wang Yu, China National Petroleum & Chemical Planning Institute

China rich in coalbed methane (CBM), and considerable advances in its development and utilization have been made here in recent years. The main ingredient of CBM is methane, which can be transmitted and used together with natural gas. It can be directly transmitted through pipelines or used to produce LNG after liquefaction. It is mainly used in civil fuels, power generation and vehicle fuels.

1. Rich resources and reserves

China’s geological reserve of at a depth of less than 2 000m is 36 800 billion cubic meters (bcm), distributed in 42 major CBM basins and accounting for around 13.7% of the reserves in major countries of the world. The basins are mainly distributed in North China and Northwest China. Fourteen of the basins hold individual reserve of over 500 bcm. Among those, some basins with reserves of 500-1 000 bcm are South Sichuan/North Guizhou Basin, West Henan Basin, Sichuan/Chongqing Basin, Santanghu Basin and Xuhuai Basin, And three basins have over 1 000 bcm: East of Ordos Basin, Qinxin Basin and Junggar Basin.
The total recoverable resources of CBM in China are 10 000 bcm. Fifteen basins individually hold recoverable resources of over 100 bcm. The recoverable resources in Erlian Basin are the highest, being around 2 000 bcm. The recoverable resources in East of Ordos Basin and Qinxin Basin are over 1 000 bcm each. The recoverable resources in Junggar Basin are around 800 bcm.
The CBM reserve that is proven so far is only 273.4 bcm, 0.74% of the predicted reserves. The goal set in the Twelfth Five-Year (2011-2015) Plan for Coalbed Methane to increase the proven geological reserve of CBM by 1 000 bcm.

2. Stable growth of development and utilization

With greater efforts made in gas drainage in recent years, the amount of CBM extracted in China has constantly increased, but the utilization rate is still quite low. The amount extracted in 2013 was 15.6 bcm, and the utilization amount was 6.6 bcm, increases of 10.6% and 13.8% respectively over the previous year, and the utilization rate was 42.3%. The amount of subsurface CBM extracted was 12.6 bcm, and the utilization amount was 4.3 bcm, an increase of 10.5% and 13.2% respectively over the previous year. The amount of surface CBM extracted was 3.0 bcm and the utilization amount was 2.3 bcm, increases of 11.1% and 15% respectively over the previous year. (See Figure 1 for detail)
The five enterprises with the biggest CBM development scale are Jincheng Anthracite Mining Group, Sinopec, PetroChina, China United Coalbed Methane Co., Ltd. and Henan Coalbed Methane Co., Ltd. The amount of surface and subsurface CBM extracted by Jincheng Anthracite Mining Group was over 2.5 bcm in 2013, including 1.417 bcm of surface CBM, and the utilization amount was 0.980 bcm. Sinopec extracted 0.92 bcm, and the utilization amount was 0.86 bcm. China United Coalbed Methane Corporation Ltd. extracted around 0.8 bcm, and the utilization amount was 0.59 bcm. Sinopec extracted 0.021 bcm. The Twelfth Five-Year Plan for Coalbed Methane proposed that by 2015, annual CBM output is to reach 30.0 bcm, including 16.0 bcm of surface CBM. Judging from the growth of CBM output in the past two years, it will be quite difficult to attain the goal. The 2015 output is expected to be 20.0 bcm, including around 10.0 bcm of surface CBM.
(1) Rapid development in CBM power generation
The installed capacity of CBM power generation in China is around 1 000 MW today. CBM power plants are distributed in Shanxi, Shaanxi, Sichuan, Heilongjiang and Guizhou. The installed capacity of CBM power generation in Shanxi accounts for around a half of the national total. Large CBM power generation projects in Shanxi include a 120MW CBM power plant of Jincheng Anthracite Mining Group in Sihe and a 120MW CBM power plant of Shanxi China Power Mingxiu Power Generation Co., Ltd. It is expected that the installed capacity will exceed 2 850 MW next year.
(2) Considerable progress in CBM liquefaction
The capacity to make LNG through CBM liquefaction in China has already reached 1.5 bcm and is expected to be 2.0 bcm by the end of 2015. CBM liquefaction projects are mostly located in coalfields like Qinshui of Shanxi and mainly based on surface CBM. Major liquefaction enterprises include ECO Shanxi Coalbed Methane Co., Ltd., China Leason Investment Group Co., Ltd. and Jincheng Anthracite Mining Group. (See Table 1 for details.)
(3) Bright prospects for utilization in fuels
Civil fuel: Considerable advances have already been made in China in the utilization of CBM in civil fuels. Civil use of CBM in China has reached around 1.89 million households today. It is expected that civil use of CBM in China will exceed 3.20 million households next year.
Vehicle fuel: CBM has a low and relatively stable price and causes little harm to the urban environment. China therefore encourages the use of CBM as vehicle fuel. There are around 6 000 vehicles using CBM as fuel in China today. Jincheng Anthracite Mining Group has set up 24 CBM filling stations in quite a few cities of Shanxi, such as Jincheng and Taiyuan. PetroChina Coalbed Methane Co., Ltd. constructed a CBM (CNG) filling station in Luliang in July 2011. The Twelfth Five-Year Plan for Coalbed Methane regards vehicle fuel as one of the priority development and utilization sectors for CBM. The utilization of CBM (CNG) in vehicle fuel has considerable market opportunities.
Other industrial fuels: CBM can be extensively used in construction materials, mechanical/electric products, light industry, textiles, petrochemicals and metallurgy. For example, industrial boilers are energy-intensive. The boilers using CBM or natural gas as fuel are much more efficient than coal-fired boilers. Moreover, the use of CBM as fuel in construction material manufacture and in metallurgy can also greatly increase thermal efficiency.

3. Existing problems

(1)Recovery technologies urgently need improvement
CBM reserves with sharp inclination account for around 30% of the total reserves in China. Breakthroughs are imperative for recovery technologies for CBM deposits with sharp inclination, and large-scale dissemination must follow. The level of key technologies and equipment for the extraction of CBM at a great depth and with low gas permeability also urgently needs upgrading.
(2) Construction of CBM pipelines lags behind
China encourages CBM to be transported mainly by pipelines. Today, the total length of CBM pipelines in China is less than 1 000 km and the annual transmitted amount is less than 6.0 bcm. As the construction of pipelines lags behind, great quantities of the CBM that is recovered cannot be transmitted to the markets a long distance away. The large-scale development and utilization of CBM is therefore constrained.
(3) Mechanisms for coordinating the development of CBM and coal are not sound
For many years, CBM recovery rights and the coal mining rights have overlapped, significantly affected the large-scale development and utilization of CBM. China issued a series of policies concerning the development and utilization of CBM in 2013. Policies on the coordinated development of CBM and coal have been proposed, but mechanisms for the coordinated development are still not sound.

4. Suggestions for development

(1) Compared with shale gas, CBM is deposited nearer the earth’s surface and is therefore easier to recover. Many enterprises in China have however plunged into the heated development of shale gas and given a cold shoulder to CBM. The recovery amount and the utilization amount of CBM are falling far short of the goals defined in the Twelfth Five-Year Plan. It is therefore suggested that investment should be increased in CBM, the development and recovery of which are relatively easy.
(2) The Views of the General Office of the State Council Concerning Further Accelerating the Extraction and Utilization of Coalbed Methane has proposed guiding opinions for promoting the development of CBM. It is suggested that specific implementation rules or measures in finance, taxes, subsidies and the management of mining rights should be issued as soon as possible.
(3) CBM development enterprises should quickly master technologies related to the recovery of CBM such as horizontal well drilling and completion, carbon dioxide driving, foam fracturing, horizontal well staged fracturing and high-pressure water jetting. They should closely follow the application and progress of technologies for the development and utilization of CBM such as the deoxidization and purification of low-concentration gas.
(4) Power generation using CBM, especially power generation projects using low-concentration subsurface gas, should be further promoted. In areas with unsatisfactory conditions for pipeline construction, CBM-to-LNG projects should be launched.             

Table 1   Major CBM liquefaction projects in China (km3/d)

Enterprise/project    Capacity
ECO Shanxi Coalbed Methane Co., Ltd.     900
China Leason Investment Group Co., Ltd. Shanxi Qinshui Shuntai Energy Development Co., Ltd.    500
Nanjing PetroChina Hengran Petroleum Fuel Co., Ltd. Qinshui Coalbed Methane Liquefaction Project    500
Jincheng Anthracite Mining Group Jincheng Tianyu New Energy Co., Ltd.    300
Chongqing Energy Group Songzao Gas Liquefaction Project     300
Yangcheng Shuntianda Coalbed Methane Liquefaction Project    300
Shanxi Ruiyang Coalbed Methane Co., Ltd. Low-Concentration Gas to LNG Project    200
Shanxi Energy Coalbed Methane Investment Holding Co., Ltd.     250
Shanxi Guoliang Coalbed Methane Development Co., Ltd. Lin County Coalbed Methane Liquefaction Project (First Phase)    300
Shaanxi Hongcheng New Energy Co., Ltd.     100
Qinshui County Huakai Coalbed Methane Co., Ltd.     150
Shanxi Qinshui Xinao Fuel Gas Co., Ltd.     150