The Emerging CBM Industry in China

Transcription

1 The Emerging CBM Industry in China Lin Jianhao Vice President China United Coalbed Methane Co. Ltd.(CUCBM) June

2 Outline 1 Current situation of China s CBM industry 2 Opportunities and challenges 3 Greatly Promote the Development of China s CBM Industry 2

3 1 Current situation of China s CBM industry 3

4 1.1 Summary CBM Resources(Trillion m3) Russia Canada China USA Australia Germany Poland England 4

5 By the end of 2004, the total proven CBM reserves in 4 blocks approved by government are billion m 3. The total underground gas drainage in Chinese coal mines in 2004 hits 1.8 billion m 3 Geological reserves for China s CBM Blocks Period Area(km 2 ) Geological reserves (M m 3 ) Recoverable reserves (M m 3 ) Recovery rate (%) Qinnan (CUCBM) P-C , , Qinnan(CNPC) P-C , , Yangquan(Coal) P-C ,340 75, Tiefa(Coal) J ,300 5

6 J1-2 J1-2 1 开开 15 开开 2 大开 16 大大 3 济南 17 济济 4 淮北 18 淮淮 5 淮南 19 淮淮 6 平平平 20 平大 7 荥荥 21 荥大 8 焦焦 22 焦开 9 西安 23 安安安 10 晋开 24 晋晋 11 屯屯 25 屯北 12 安阳 26 阳安 29 阳阳 13 澄澄 27 澄澄 30 澄澄 14 彬长 28 彬彬 J1-2 乌乌乌乌 J1-2 T3 拉拉 拉拉 J1-2 P2 J1-2 全全全全全全全全全全全 CBM Exploration Blocks in China P2 C1 西西 T3 J1-2 J1-2 E T3 兰郑 成成 P2 T3 E 呼呼呼呼 北北 J 银银 济南 3 C-P C-P C-P 13 C-P 郑郑 7 8 C-P 西西 C-P P2 E C1 P2 J1-2 J3-K1 上海 J1-2 J3-K1 J3-K1 广郑 J3-K1 J3-K1 J3-K1 J1-2 C-P 1 南北 P2 武武 P2 上上 C1 P2 P2 长长 南南 C C1 C1 福郑 P2 P2 P2 T3 T3 哈哈哈 E 长长 J3-K1 29 J3-K1 E C-P J J1-2 台北 28 南上 By the end of 2004, about 1.4 billion RMB have been invested in China s CBM exploration, including 1 billion RMB of foreign investment. CBM wells mainly drilled in northern China s Shanxi province and Shaanxi province., accounting for 56% of national total. 6

7 CBM Wells Drilled by the End of 2004 Units No.of Wells Percentage Remarks CUCBM % 60 for CUCBM self operations and 127 for international cooperation Petro china 29 10% Sinopec 6 2% Fuxin City 8 3% China Coalfield Geology Bureau 25 9% UNDP 12 4% Others 20 7% Total % 7

8 1.2 CUCBM Self-Funded Operations China s CBM Evaluation Project CUCBM Self-Funded Operations Sanjiang Project in Heilongjiang Province (Sanjiang-Mulinghe coal bearing area) Liaozhong Project in Liaoning Province (coal fields of Fushun, Tiefa and Fuxin) Hancheng, Shannxi Huanghebei Project in Shandong Province (Huanghebei Coal Field) Shouyang Project in Shanxi Province (Qinshui Coal Field) Panhe CBM Demonstration Project in Shanxi Province (Qinshui Coal Field) Eastern Yunnan and Western Guizhou Project (Guizhou, Yunnan, Eastern Yunnan and Western Guizhou coal bearing area) 8

9 1.2.1 The Hi-tech Industrial CBM Demonstration Project of Panhe The project was approved by the Chinese government in December Located in Qinshui Basin, Shanxi Province, the project aims at drilling 950 CBM wells which produce 700 million m 3 of gas each year. Phase 1: 150 wells to be drilled by the end of 2006, producing 100 million m 3 of gas each year. Phase 2: 400 wells to be drilled, producing 400 million m 3 of gas each year. Phase 3: 400 wells to be drilled, producing 700 million m 3 of gas each year. Project prospect program: to establish the Qinshui Basin CBM Production Base, producing 3 trillion 4 trillion m 3 of gas each year. 150 wells in Panhe CBM Demonstration Area 9

10 1.2.2 Pilot production in Zaoyuan of Qinshui Basin Consisting of 15 wells Production for over 5 years 2000 m 3 ~3000 m 3 per day for single well A small gas power station and a compression station built and some gas is sold here. FZ

11 CBM power station (2 400 KW unit) Compressed gas transported to Linzhou of Henan and Changzhi of Shanxi for civil use CBM compression station with capacity of 36,000 m 3 per day 11

12 1.2.3 CBM pilot production Project in the Hancheng wangfeng-longting area 1) Work program in the year wells with footage of 12000m ~ 13500m 40 km of 2-D seismic lines building a power station building a CNG compression station pipelines and associated power transmission project producing 25 ~ 30 million m 3 per year 2) 200 wells to be drilled from the year 2007 to 2008 for a CBM field, producing 120 million m 3 CBM per year 3) Producing 800 ~1000 million m 3 CBM per year for one CBM field from the year 2008 to

13 The CBM pilot product project of the Hancheng Wangfeng-Longting area a state-level key hi-tech project 13

14 1.3 underground CBM drainage and utilization 203 coal mines had performed underground CBM drainage by the year billion m 3 of total gas drainage 85% of the total drainage were conducted by 20 main coal mines the drainage of Yangquan in Shanxi, Huainan in Anhui and Funshun in Liaoning accounts for one third of the total in China 14

15 Drainage by China s main coal mines in 2003 The Sixth US-China Oil and Gas Industry Forum (OGIF) No. Company Production(Mm m3) 1 Yangquan Coal Group Huainan Coal Group Fushun Coal Group gqing Songsao Coal & Electricity Co hou Panjiang Coal & Electricity Co Shuicheng Coal Group Jincheng Coal Group Tiefa Coal Group Huaibei Coal Group Ningxia Coal Group Furong Coal Bureau Fuxin Coal Group Pingsuo Coal Group Shenyang Coal Group Hebi Coal Group Tongchuan Coal Bureau Zhongliangshan Co.Ltd Liaoyuan Coal Bureau Sichuan Tianfu Co.Ltd Jiaozuo Coal Group

16 CBM from underground drainage mainly for civil use, only small proportion used in the coal mine welfare and as industrial material CBM power stations already built or to be built in Jincheng of Shanxi Povince, Songzao of Chongqing Municipality and Panjiang of Guizhou Province CBM underground drainage system of Sihe coal mine, Jincheng of Shanxi Province (the surface pumping station) 16

17 1.4 CBM development in cooperation with foreign companies Contract Model: Production Sharing Contract Contract term: 30 years for periods of exploration, development and production 3~5 years for exploration period, in which foreign companies bear costs and risks independently Commercial discovery Development period: 51% for Chinese party and 49% for foreign company regarding participating interests, negotiable Production period: recovery of exploration costs and share of CBM according to each participating interests 17

18 1.4.2 Procedures for foreign companies to access CBM cooperative projects Contact CUCBM Select block Evaluate the block and prepare for negotiation Forward intent of cooperation in writing to CUCBM Negotiate and sign the contract CUCBM applies for cooperative block Approve the contract, establish the Joint Management Committee and implement the contract 18

19 1.4.3 Fruitful achievements for international cooperation Signed 21 Production Sharing Contracts 33,800 km 2 for total contract area 10 foreign cooperative partners US$ 121.1million for exploration Drilled 127 CBM wells, including 40 newly drilled wells with 1 cavity completed well, and 37 fractured wells with 5 pilot production well groups. 9 other blocks under negotiation currently 19

20 1.4.4 Geographical Location for the projects in cooperation with foreign companies Yongli(Zhongyuan) Zhungeer(ChevronTexaco BHPB) South Hedong (ChevronTexaco) Panxiedong(Greka) Enhong(Far-East) Huangshi(China-Canada) Fengcheng(Greka) Qinshui Basin(Conoco-Phillips\Far- East\Greka\Asia-American, etc.) 20

21 1.5 The motive force leads the rising of CBM industry in China improve coal mine production safety and increase profit reduce greenhouse effect and protect environment improve China s energy structure and meet needs of clean energy government supporting policies ripening CBM technology driving the development of relevant industries and increasing employment 21

22 1.5.1 CBM development may improve coal mine production safety gassy coal mines and outburst coal mines accounting for 46% of the total in China deaths in gas accidents amount to 30%~40% of the total deaths in China s coal mine accidents, and 70%--80% in China s coal mine serious accidents drainage before mining will effectively prevent gas accidents, improve coal mine safety and reduce construction costs 22

23 1.5.2 CBM development may reduce emission of greenhouse gas the greenhouse effect caused by CBM is 20 ~24 times that caused by carbon dioxide, contributing 15% to global warmth A great deal of CBM are released to the atmosphere during coal mining each year in China. The situation is worsening with increasing coal production in recent years. The Chinese government is paying increasing attention to environment protection. CBM development has been incorporated in the Catalogue of Industries, Products and Technologies Encouraged by the State and Guidance Book for Industries with Foreign Investment 23

24 1.5.3 Develop and utilize new energy, improve China s energy structure and meet needs of clean energy CBM development in large scale may ease the tension of China s energy supply, improve its energy structure, increase clean energy and fill the shortage of its natural gas reserves 24

25 China s abundant CBM resources China is rich in CBM resources. It is estimated that the total CBM resources to the depth of 2000m below the surface is trillion m 3, which is approximately equal to the onshore conventional natural gas. CBM resources in China s developed central and eastern regions with great energy consumption accounts for 74.6% of the total in the country, CBM will be the replenishment of deficient natural gas As rich CBM areas, the Ordos Basin and the Qinshui Basin in Shanxi are suitable for CBM development in scale. 资源量 ( 亿 m3) West % 63.81% 10.79% East Middle Distribution of China's CBM Resource 全全全资源量 ( 亿 m3) 鄂哈多斯沁安 吐 哈准噶哈 豫西 - 两淮六盘安 Coal Basin 伊犁银南黔北 塔里乌霍西 25

26 1.5.4 Government supporting policies 5% Value Added Tax (TAX) for CBM projects in cooperation with foreign companies; 13% VAT for CUCBM s self operation projects with 8% returned subsequently; Custom and related duties exempted for imported materials and equipment needed for CBM exploration and development; CBM price determined by the demanders and suppliers through discussion and no fixed price by the government Royalty: Royalty is free if the annual CBM production less than 1 billion m 3 ; 1%~3% paid if the annual CBM production more than 1 billion m 3. For fees of CBM exploration right and mining right in China s western region: free for the first year; 50% exempted from the second to the third year; 25% exempted from the fourth to the seventh year. 26

27 1.5.5 Ripening CBM technologies Having a series of technologies of drilling, fracturing and production formed through years of exploration applicable to the CBM geological features in China. Technology for CO 2 enhanced CBM recovery Multi-lateral directional drilling technology successful in Daning coal mine area Successful promotion of CBM underground drainage technology 27

28 Application of multi-lateral directional drilling in China A multi-lateral directional well, drilled in Daning coal mine area under experimental production, producing 20,000 m 3 of gas per day Two multi-lateral directional wells to be drilled by PetroChina in Qinshui Basin in 2005 Seven multi-lateral directional wells to be drilled by CUCBM in Qinshui Basin from 2005 to

29 Application of horizontal drilling BHPB plans to exploit MRD drilling for the Zhunge er project in cooperation with CUCBM Far East Energy plans to drill two similar wells for Shouyang Project 29

30 1.5.6 Driving relevant industries and increasing employment CBM operation with huge associated engineering systems, establishment of a CBM production base will spur on the development of transportation, iron and steel, cement, chemicals, power, hotels and restaurants, offering jobs and promoting the development of local economy. 30

31 2. Opportunities and challenges for China s CBM industry 31

32 2.1. New Opportunities for the development of China s CBM industry Supports from top Chinese leaders and Chinese government Premier Wen Jiabao, Vice Premiers Huang Ju and Zeng Peiyan instructed for many times that more efforts should be made to reinforce and speed up China s CBM research, exploration and development. The Eleventh Five-Year Plan CBM industry development program under draft Approving the establishment of China s CBM Engineering Research Center Approving the building of demonstration project for China s CBM industry 32

33 2.1.2 Improvement of infrastructures Around 3 major national pipelines 陕京一线 across Shanxi Province (No.1 and No.2 Shaanxi-Beijing and the West-East Gas Transportation Pipelines), the provincial 陕京二线 西气东输管线 government plans to build 3 northsouth and 3 west-east pipelines within the province, some of them are under construction. 33

34 准南全田 准格哈澄焦全 澄东澄焦全 沁安盆地 两淮全田 焦开澄焦全 Some rich CBM areas are located along the West and East Gas Transport Pipeline. 34

35 Expanding markets causing energy in short supply The Chinese government pays greater attention to environment protection and along with the urbanization pace accelerated, more and more citizens and industry consumers in iron & steel, smelting, ceramics, glass and building materials increasingly need clean energy. The CBM development will help to relax such energy tension. 35

36 2.2 Challenges for China s CBM industry Having successful commercial CBM production in large scale Developing a series of CBM exploration and development technologies applicable to the geological features in China. Studying and working out the policies for the development of CBM industry and make the CBM more competitive in the development and utilization The CBM upstream and downstream developing in harmony 36

37 3. Greatly Promote the Development of China s CBM Industry 单位 : 万亿立方米 37

38 3.1 CUCBM development strategies: Relying on the advantages of resources, market and policies to achieve breakthrough in target areas and develop phase by phase both for the CUCBM s self operation project and project in cooperation with foreign companies through surface drilling and coalmine drainage; making rational short-term and long-term plans and integrating the industrial development with coalmine gas control. 38

39 3.2 Targets for China s CBM industry Development By the end of 2010, establishing two or three commercial CBM development bases, producing 3.25 billion m 3 of gas per year; by the end of 2015, establishing three or four commercial CBM development bases, producing 10 billion m 3 of gas per year; by the end of 2020, achieving 20 billion m 3 of gas per year 39

40 3.3 Measures adopted to promote the development of China s CBM industry Working out national CBM industry development program A special CBM industry development program for 5 to 10 years already included in the Eleventh Five-Year Plan Of National Economy & Social Development to regulate China s CBM exploration and development, funds, programs and targets for the production projects to help the CBM industry develop orderly effectively and harmoniously. 40

41 3.3.2 Asking for Proper Incentives 单位 : 万亿立方米 Asking the government to grant proper incentives with reference of US successful CBM policies, such as: Exemption from VAT and Income Tax for CBM production; No fees for the CBM exploration right and mining right, exempted from resource tax and resource compensation fees for 20 years Giving subsidies to the CBM consumers for the development and utilization of CBM; imposing deposits on coal mines to prevent them releasing the gas freely. 41

42 3.3.3 Supporting the key CBM demonstration projects with more funds 单位 : 万亿立方米 The government giving certain amount of funds to those demonstration projects of CBM development, utilization and coal mine gas utilization and control in the key CBM fields and adjacent mining areas in the preliminary period, meanwhile, enforcing the exploration of those potential CBM fields and making plans to fund the CBM exploration by backbone state CBM enterprise in key areas. 42

43 3.3.4 Reinforcement of the scientific research for CBM development and utilization 单位 : 万亿立方米 Establishing National CBM Engineering Research Center to reinforce the organization and leadership of CBM study and research on the key engineering technologies, with priority to those projects under CBM basic studies, key technical research program and National Natural Science Funds; giving more investment to the CBM research work to achieve breakthroughs in the CBM technologies which will bring the good effects in the CBM production and economic benefits. 43

44 3.3.5 Legislation to control and utilize coal mine gas 单位 : 万亿立方米 Establishing funds and subsidies for CH 4 emission reduction; Issuing laws and regulations to limit the emission of CH 4 to encourage coal mines to develop and utilize the CBM; Establishing and improving the procedures for gassy coal mines to drain gas before mining and working out relevant responsibility investigation system. Strictly abiding by the laws and regulations of environment protection 44

45 Thank You! 45