Financial Post: China’s coalbeds spur unconventional gas supply boom

After more than a century ripping out its insides to supply coal to the rest of the country, the heavily mined and polluted province of Shanxi in northern China is in the midst of a gas boom.

Under the spray of the Yellow River near the city of Jincheng, “nodding donkeys” bob in lines that stretch to the horizon, hitched up amidst precious farmland to feed on the gas streaming through the coal seams below.

Gleaming white storage tanks tower over the highways and dozens of drilling rigs dot the cliffs and valleys, some near the famed ancient cave settlements of Shanxi.

Gas output from the coal seams is rising fast and is set to hit 8 billion cubic metres (bcm) this year, up a half from 2011 – emerging from nowhere just six years ago to provide China with a cleaner, home-grown alternative fuel for the future.

China is investing 100 billion yuan ($16 billion) to double output again by 2015. Beijing wants coal seam gas output as high as 30 bcm by 2020, which would be 15 percent of China’s total gas production, up from 5 percent of the total last year.  MORE