The Shanxi project in full development could sustain an estimated
3,000 horizontal gas wells, giving it the potential to become
one of the largest CBM projects in the world.
Over the past
20 years, China’s economy has grown 500% and personal incomes
have quadrupled.China is now a member of the World Trade Organization
and has a vested interest in abiding by business rules and the contract
law of all major industrialized countries. China’s largest
trading partner is the U.S. and imports from China are annualizing
$124 billion this year. China exports five times more to the U.S.
than they import, contributing to the largest trade imbalance ever
recorded between two countries. Trade is growing so far this year
by 32%. The U.S. is the most important customer to China. The U.S.
imports about as much from China as they do from Germany, France
and Italy combined. It is important to emphasize that China
and the U.S. are now commercially linked major partners in the world
economy. Because of the above, "Country risk" is now most
likely not at all applicable to China. Also, more foreign investment
went to China last year from all over the world than the U.S. and
the U.K. combined. The business of China is now business.
China is energy deficient and coalbed methane may play a big part
in China’s energy future. Natural gas consumption in China
is rising rapidly, fueled by an unprecedented economic boom. China’s
State Council is pushing for a four fold increase in natural gas
usage by 2010, and has mandated that natural gas replace coal as
the major source for electricity by the 2008 Olympics in Beijing.
According to the New York Times, if China in the future uses as
much energy per capita as the U.S., it will amount to more energy
than is currently produced worldwide (Nicholas Kristoff NY Times,
June 3, 2003).
Chevron-Texaco, and BP Amoco have CBM joint ventures ongoing in
Far East Energy has accumulated a substantial land package in China
with China United Coalbed Methane Co. (China United) and ConocoPhillips
to exploit total gas-in-place estimated by ConocoPhillips and Yunnan
Provincial Coal Geology Bureau to be potentially 18.3 to 24.9 trillion
cubic feet (Tcf). Using a very conservative recovery rate of 50%,
recoverable CBM resources are potentially 9.2 Tcf to 12.5 Tcf (FEEC’s
share is 4.8 Tcf to 6.9 Tcf depending upon CUCBM and ConocoPhillips
The following summary underscores the scope of the company’s
Shanxi 6.55 – 9.8 Tcf of recoverable CBM resources
• Enhong 1.10 Tcf of recoverable CBM resources
• Laochang 1.55 Tcf of recoverable CBM resources