A 100-million-cubic-meter coalbed methane exploitation project has been completed in north China's Shanxi Province, marking the country has finally began to make use of the gas on an unprecedented scale.
Located in the southern part of the Qinshui Basin, Jincheng City of Shanxi Province, the gas exploitation project is the largest of its kind in China, with a verified gas deposit of 40.2 billion cubic meters and an annual production of 100 million cubic meters.
At a price of 1.1 yuan (0.136 US dollars) per cubic meter, the project's yearly output is expected to be worth 110 million yuan (13.6 million US dollars), said Sun Maoyuan, general manager of China United Coalbed Methane Corp. Ltd, the investor of the project.
The company has pumped 360 million yuan (44.4 million US dollars) into the project.
The first phase is capable of churnning out 80,000 cubic meters natural gas daily, which will be supplied to gas companies and power grids, said Sun.
Shanxi Province boasts an abundance of coal resources. It is also China's largest reserve base of coalbed methane. The estimated methane deposit is about one trillion cubic meters, or one third of the country's total.
Experts said the methane could be burned for 6,682 years by one million households, or be turned into 22 trillion kwh's electricity.
"Coalbed methane is a valuable asset of Shanxi, which should not be lying there underground uselessly," said Yu Youjun, the acting governor of the province.
However, the methane, or more commonly known as natural gas, could also be extremely hazardous.
In 2004, China's coal mines produced 14 billion cubic meters of gas, a number experts say that it will increase to 17 billion cubic meters in 2020.
Notably, 80 percent of the casualties in coal mine accidents could be attributed to their deaths to gas explosions, which cause direct loss of 750 million yuan (92.6 million US dollars) a year.
"The proper use of the gas is meaningful in the sense of environmental protection, work safety control, and profit generation," said Yu.
In recent years, the province has been vigorously bringing in foreign capital to tap the gas resources. It has kicked off an exploitation program with two billion yuan (247 million US dollars) in foreign loans.
The Asia Development Bank has vowed to provide over 1 billion US dollars in loans under favorable conditions to assist the province's endeavor in the next 10 years.
Another massive methane exploitation project with an installed capacity of 720 million cubic meters is also under construction in Shouyang County. By 2008, the gas will be sent to Beijing, Shanghai and other major cities through the west-east gas transmission routes, said sources with the provincial government.
China is the third largest coalbed methane reserve country in the world, only next to Russia and Canada. The latest evaluation shows that China has 31.46 trillion cubic meters coalbed methane lying above a 2,000-meter depth, 60 percent of which is suitable for exploitation.
China's methane resources are distributed in 24 provinces, with Shanxi Province and Xinjiang Uygur Autonomous Region accounting for more than half of the country's total reserve.