The China United Coal-Bed Methane Corp. Ltd. (CUCBM) and Lowell Petroleum Co. of Australia signed a production contract in Beijing on November 12 to co-develop methane resources in Shanxi Province, north China.

The designated Liulin block, covering 198 sq. km., is estimated to contain 30 billion cu. m. of coal-bed methane reserves. According to CUCBM's vice-president Sun Maoyuan, the block's methane resources have a fair permeability and lie at a moderate depth, both favorable for industrial development.

Liulin block, located in the coal-rich Hedong Coal Mine, contains around three trillion cu. m. of potential methane reserves, accounting for eight percent of the national total.

Sun said that up to now his company has signed five contracts with four foreign partners on jointly tapping coal-bed resources in Hedong Coal Mine. The five contracted blocks, neighboring each other, cover a combined area of 8,700 sq. km. in Hedong. CUCBM hopes to build the coal mine into the country's largest coal-bed methane production base.

CUCBM has awarded seven contracts to foreign investors, including the Liulin contract. Lowell is CUCBM's first foreign partner from a country other than the United States.

China's total coal-bed methane resources are estimated at 35 trillion cu. m., equivalent to 45 trillion tons of standard coal and equal to the country's conventional gas resources, ranking third in the world.