Cleaner gas en­ergy project set to hit to­tal prof­itabil­ity by 2020

Bil­lion cu m

China Daily (Hong Kong) - - BUSINESS - By ZHENG XIN

After years of devel­op­ment, Greka Group is pre­dict­ing that all eight of its Chi­nese coalbed meth­ane blocks will be on­line and prof­itable by 2020, help­ing na­tional ef­forts to pro­vide China with a cleaner en­ergy al­ter­na­tive.

“We have been work­ing with our Chi­nese part­ners in coalbed meth­ane drilling and ex­plo­ration tech­nol­ogy over the past two decades, and we are glad to see one of the blocks co­op­er­at­ing with China Na­tional Pe­tro­leum Corp, the na­tion’s largest oil and gas pro­ducer by do­mes­tic an­nual out­put, be­came prof­itable in 2010 and the other block work­ing with China Na­tional Off­shore Oil Cor­po­ra­tion turned prof­itable in 2015,” said Greka Group Chair­man and CEO Ran­deep S. Gre­wal, dur­ing an in­ter­view with China Daily in Bei­jing.

“With all the tech­nol­ogy ma­ture and in­fra­struc­ture ready thanks to the past two decades’ of de­vo­tion, we will see a third block be­come prof­itable by next year and we ex­pect all of the com­pa­nies’ eight blocks to be prof­itable by 2020,” he said.

The com­pany has spent nearly 10 years de­vel­op­ing a drilling so­lu­tion called Lined Faulted Brit­tle Coals, an adap­ta­tion of the hor­i­zon­tal drilling meth­ods, that en­ables drilling through mul­ti­ple faults with a sin­gle well.

The tech­nique is also safer, more en­vi­ron­men­tally friendly and more cost ef­fec­tive in the long term, ac­cord­ing to the com­pany.

“It has taken con­sid­er­able time and cap­i­tal, but it has been very suc­cess­ful,” said Gre­wal.

An­a­lysts be­lieve the prospects for the clean fuel in China are bright but chal­lenges still re­main.

Fig­ures from Bloomberg New En­ergy Fi­nance re­veal that China pro­duced more than 9 bil­lion cu­bic me­ters of coalbed meth­ane in 2017.

How­ever, Na Min, a se­nior an­a­lyst for oil and gas at Bloomberg New En­ergy Fi­nance, said that clean fuel pro­duc­tion needs to al­most triple by 2020, if it is to meet the 24bcm gov­ern­ment tar­get, set in the 13th Five-Year Plan (201620).

She said that al­though she main­tain a mod­est growth sce­nario for coalbed meth­ane and an­tic­i­pate it may fall short of the gov­ern­ment tar­get, surg­ing gas de­mand and on­go­ing re­form of the nat­u­ral gas in­dus­try may help ac­cel­er­ate coal­lifted bed meth­ane devel­op­ment.

“As part of the gov­ern­ment’s ef­forts to fight pol­lu­tion, 11 cities of Fen­wei Plain, an area of Shanxi and Shaanxi prov­inces that has heavy in­dus­try and wide­spread use of sub­stan­dard coal, were iden­ti­fied as key ar­eas to re­duce air pol­lu­tion by in­creas­ing the gas pro­por­tion in their en­ergy mix, and a growth in gas de­mand in north­ern cities will mean down­stream gas sales op­por­tu­ni­ties for coalbed meth­ane pro­duc­ers.”

How­ever, Na said coalbed meth­ane devel­op­ment has been held back by pipe­line tar­iffs, min­ing rights over­lap­ping with coal, and long ap­proval pro­cesses.

With these bar­ri­ers grad­u­ally

or eased by on­go­ing mar­ket re­form and fur­ther tech­no­log­i­cal break­throughs, pro­duc­ers are mo­ti­vated to in­crease spend­ing and out­put to meet surg­ing gas de­mand, she added.

Gre­wal added that the prospects for coalbed meth­ane in China are bright, as the coun­try is rich in the re­sources, rank­ing third in the world after Rus­sia and Canada.

“Many coun­tries that de­vel­oped coalbed meth­ane took some 10 to 15 years for the tech­nol­ogy to ma­ture, and China’s pace is con­sis­tent with the world’s de­vel­oped coun­tries,” he said.

“We strongly be­lieve there is a bal­ance be­tween re­vers­ing the en­vi­ron­men­tal dam­age and keep­ing in­dus­trial economies afloat. Progress is tak­ing place in the right di­rec­tion, and it’s just a mat­ter of time,” he said.

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