Economic evaluation of coalbed methane production in China

Roaring natural gas demand, energy security and environment protection concerns coupled with stringent emission reduction requirement have made China's abundant coalbed methane (CBM) resource an increasingly valuable energy source. However, not all of China's CBM resource is economic to develop under current technological condition and economic situation. In order to locate the CBM resource with economic viability to develop in China, economic evaluation of CBM production is conducted by applying net present value (NPV) method. The results indicate that more than half of CBM resource in China is economic to develop. It shows that CBM price, production rate and operating costs are the three major factors with most impact on the economic viability of the CBM development in target areas in China. The result also demonstrates that the economic limit production is roughly 1200 cubic meters per day. These economic evaluation results provide important information for both CBM companies and China government.