China’s CBM production reportedly fell in 2016 for the first time in five years.
The country’s overall CBM output for the year totalled 17.3 bcm compared with 18 bcm in 2015, Interfax China reported, citing official sources.
The decline occurred despite financial incentives introduced by the Chinese government over the course of the year in an effort to raise production.
In March 2016, Beijing increased subsidies for CBM production to 0.3 yuan (US$0.04) per cubic metre, up from 0.2 yuan (US$0.03), the Chinese Ministry of Finance said. The incentive will stay in place until 2020.
The subsidy was increased after developers complained that CBM exploration and production had become uneconomical following state-ordered reductions in conventional gas prices for industrial users at the end of 2015, according to local media.
The reductions were introduced to encourage the greater use of gas across the country in place of coal.
The 2016 output decline follows the announcement in December by China’s National Energy Administration (NEA) that it was setting a lower annual production target for CBM by 2020 under the new national Five-Year Plan.
“The country seeks to extract 24 billion cubic metres [of CBM] and own three industrialisation bases in 2020, according to a development plan released by the NEA,” Chinese analysts Fenwei Energy said.
This is lower than the 30 bcm per year by 2020 target set out last year by the NEA’s sister state agency, the National Development and Reform Commission (NDRC).
The main production bases are in the Ordos Basin spanning several coal provinces, the Tarim Basin in northwest Xinjiang, and the Sichuan Basin, where shale gas is also being developed.
Much of the CBM brought to the surface is wasted by being released into the atmosphere, and is often bled from active mine shafts in order to reduce explosion risks.
Of the 18 bcm produced in 2015 only 47% was used in energy projects, Fenwei said citing the NEA. The 24 bcm target for 2020 involves at least 66% being used, it added.