FOR "CLEAN" COAL, CHINA OPENS THE DOOR

Numbers about China are always impressive. But here’s a fact that’s not a number: China’s energy sector is becoming more independent. From oil to sun and wind, Chinese companies are cutting out foreign investors and keeping the work in China.

Not carbon-capture-and-sequestration. They’re still paying western companies for their ‘clean” coal know-how. Why? Because China gets 2/3 of its electricity from coal. Because China added 90 gigawatts of coal-fired power in 2006 and then did the same thing in 2007. 90 gigawatts is the combined power generation capacity of Britain AND France for 2006 AND 2007. Because China’s greenhouse gas (GHG) production is going to keep getting bigger for at least the next 2 decades, despite the fact that its air pollution is already seriously impacting its peoples’ respiratory health.

China also wants foreign experts to help exploit its huge coalbed methane resources. In the project reported here, coalbed methane (a gaseous fuel) will be pumped out of pockets in seams between beds of noncommercial low-grade coal. Captured plant emissions will be pumped in simultaneously. Theoretically, methane production is enhanced as emissions are stored.

Coalbed methane is not clean but it’s cleaner. It is likely to earn CERs from the UNFCCC carbon reduction program, making it that much better an investment.

How long will China keep partnering with western companies on carbon capture? Until China gets up to speed. At the rate China learns and grows, and the numbers on that are impressive, it won’t take too long.

This is the reality. (click to enlarge)

Focus: Carbon Storage In China Grabs Foreign Cos Attention
David Winning (w/Denis McMahon), January 25, 2008 (Dow Jones Newswires via Nasdaq)

WHO
Enviro Energy International Holdings Ltd. (Kenny Chan, chairman/ceo), Petromin Resources Ltd. and the Alberta (Canada) Research Council, China United Coalbed Methane Corp. (CUCBM) (Sun Maoyuan, chairman),

WHAT
Despite everything China is doing to build New Energy and all its efforts to increase energy efficiency, it is going to be burning a lot of coal for a long time. It also wants to exploit its coalbed methane resources more effectively and pumping captured GHG into the methane beds enhances production. China therefore needs carbon-capture-and-sequestration (CCS) technology more than any other nation in the world. It is, however, behind the industrialized west in CCS development – which is why CCS remains an area of opportunity in China for foreign companies.

Changing what it is possible to change makes a marginal difference. Do marginal changes matter? (click to enlarge)

WHEN
- The IEA says China will become the world’s biggest GHG emitter in 2007-08.
- 2005: Chinese coalbed methane production was 2.3 billion cubic meters. 2010: Chinese coalbed methane production will be 10 billion cubic meters.
- To now CCS projects in China have been small scale research projects. Going forward, China and outside partners will develop commercial scale, long term projects.

WHERE
- Enviro Energy International Holdings Ltd. is based in Hong Kong.
- Petromin Resources Ltd. is Canadian.
- U.S., South African and other Hong Kong energy companies are developing projects, as are multinationals.

China will soon move up to number one. (click to enlarge)

WHY
- Enviro Energy, Petromin and CUCBM will work together on a 5-year CCS project in northern China’s Shanxi province. Partial funding of the $1.4 billion project from China’s Ministry of Science and Technology
- Alberta Research Council will provide technical support.
- The partners will drill wells into seams between unworkable coalbed methane deposits. It will exploit the methane and use the empty wells for storage in the 1000 meter deep, geologically stable structures.
- CUCBM, the Alberta Research Council and the Ministry of Commerce did a $9 million test project that successfully doubled methane production.
- Other projects: (1) U.S. coal power Peabody Energy Corp., Chinese utility Huaneng Power International Inc. and partners: $1 billion CCS coal plant whose emissions will be injected for Enhanced Oil Recovery (EOR) into Tianjin offshore oil fields.(2) South African Sasol Ltd. is exploring a coal-to-liquids project (Sasol’s specialty) with CCS capability at Inner Mongolia’s Ordos Basin oil fields.
- Also competing for coalbed methane developments: multinationals Chevron Corp. and ConocoPhillips; smaller companies Pacific Asia China Energy Inc. and Green Dragon Gas.

China is rich in coal - and growing in lung disease. (click to enlarge)

QUOTES
- Sun Maoyuan, chairman, CUCBM: "The ultimate target for this project is to try to capture CO2 from power plants and chemical plants and then inject this C02 into the deep coal seam, and also to enhance coalbed methane production…"It's definitely no problem for the project to be commercial in the future."
- Kenny Chan, chairman/ceo, Enviro Energy: "I think it will be highly profitable."
- Michael McElwrath, chief executive, Far East Energy Corp. (FEEC): "It's something that will be a possibility for us in the future. We've not done it yet…The production techniques we use...will be determined over the next couple of years. We'll be looking at everything from CO2 injection to the use of nitrogen, to very simple wells completed only with water…"