Cleaner gas energy project set to hit total profitability by 2020

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.