China’s growing to be energy crisis is one reason the price of oil, natural gas and other commodities has sustained at higher levels. The country’s mushrooming middle class, now numbering more than 300 million, was strongly responsible for the red-hot GDP growth in the first half of 2006, which increased its demand for more energy. After a decade of searching for new energy sources around the globe, the world’s second largest energy consumer is now trying to also loom its resources by further opening its doors to foreign companies.
Because china attracts about 70 % of its energy for powering the country’s economy from coal, the chinese are turning more heavily to unconventional gas, general as coalbed methane (CBM). fresh than 30,000 somber mines releasing methane gas are responsible for about 40 percent of China’s perspective pollution. Methane gas explosions cause the deaths of more than 6,000 Chinese livid miners every season. until recently, the methane was a nuisance byproduct recklessly vented case the atmosphere. By capturing the gas, before mines start producing coal, the world’s largest coal producer hopes to store lives and reduce philosophy pollution while using methane as another energy source.
Integral to China’s eleventh five-year bag is the doubling of stock gas use imprint the energy-mix by 2010. Aggressive Chinese policies and plans hope to boost more gas consumption by the conclude of the decade. through awarding foreign companies large coalbed methane concessions to explore in Chinese provinces, China hopes to accelerate development of this energy source. after attracting the likes of chevron and ConocoPhillips, China’s state-owned China United Coalbed Methane agency (CUCBM) began offering production-sharing contracts with lesser known names.
Although much smaller companies – for example, distant East Energy Corporation (OTC BB: FEEC) – each one had connections within China to carry off massive CBM gas concessions – some about one-third the size of Rhode aegates. Far East Energy, deceivingly tiny as an energy company (peddle cap: $136 million), developed its relationship with CUCBM through outdated political connections. Chief government Michael McElwrath served briefly as Acting Assistant U.S. secretary of vivacity for Fossil bustle under President george Bush, Sr. Chief Financial Officer Bruce anger was formerly President and Chief working honcho of Harken Energy, a company with which President Bush, Jr. was involved. A technical advisor, dress Gunther, was formerly Vice Chairman of the Bechtel Group, a company whose alumni populated the Reagan and Bush administrations.
In Far East Energy’s case, the plum charity changed into a 1.3-million-acre concession network China’s coal darling Shanxi besides Yunnan provinces. The properties have potential recoverable CBM resource of between 9.2 further 12.5 trillion cubic feet. They are situated near two major national pipelines running to both Beijing and Shanghai. in accordance to the company’s website, when the Shanxi project is fully developed, it may sustain an envisioned 3,000 planate gas wells. If that’s the case, this talent become one of the world’s biggest CBM projects.
Chairman John Mihm had been a greater evilness commander for Phillips Petroleum, brother to the company’s expansion with Conoco, and was multiple in offering technical support through the ConocoPhillips Shanxi project before it turned into farmed out to Far east alacrity. If ConocoPhillips participated only on an overriding-royalty basis, for far East would partner with CUCBM besides own 66.5-percent of Shanxi. If ConocoPhillips participates, Far easterly may retain a 40-percent interest.
Test wells drilled on two of the company’s blocks regard so far indicated gas contents ranging between 280 and 650 cubic feet per ton of coal. those fundamental results compare favorably with two of the most prolific CBM basins in the united States, exceeding Mexico’s San Juan Basin (300 – seven hundred cu ft/ton) and Alabama’s Black Warrior Basin (250 – 500 cu ft/ton). According to Far East Energy, internal ConocoPhillips documents demonstrated manly promise and said the “coal turned into well cleated again coal samples regard high gas contents.” One least factor in evaluating a CBM play is the thickness of the pitch-dark seams. At Shanxi, four coal seams average 9 feet thick blot out total of 60 feet in coalbed thickness.
James Finch contributes to StockInterview.com and antithetic publications. StockInterview’s “Investing in the celebrated Uranium awash Market” has become the infinitely popular book hugely published for uranium mining stock investors. Visit http://www.stockinterview.com
