China’s Natural and CBM Gas Ambitions Include Beijing Olympiad

by: James Finch

In Seoul, South Korea, public officials pressured food vendors to stop selling roasted canines during the 1988 Olympiad to avoid giving the city and country a bad name among the tourists.

Beijing has a more serious problem. It is one of the more toxic and polluted cities in the world.

This calls for a different recipe – using more natural gas in the ramp up time before the 2008 Olympics, which will be held about 13 months from now.

Our sources had suggested coalbed methane gas might be used to light the Olympic flame. Boldly, we included a ‘fantasy’ photo of this in the introduction to our publication, “Investing in China's Energy Crisis.” How close to the truth we came!

Further research pointed to a widespread substitution of coal for natural gas in Beijing over the course of the next year. Now it appears official. Earlier this week, China Petroleum Daily reported that state-owned China National Petroleum Corp is hoping to increase Beijing’s supply of natural gas by 5.5 billion cubic meters by next year.

Sinopec (NYSE: SNP) hoped to low-sulfur gasoline at the company’s Yanshan refinery to help reduce smog levels.

Natural gas will be used instead of coal to fuel Beijing’s electric power plants, water heaters and cookers. Some cabs and buses will be running on natural gas and coalbed methane gas. This won’t be a first for China. We covered this in a previous article, and later discovered the practice has been spreading across China.

Not only did Jiangxi first connect its coalbed methane to its power station in early June, but (as we have been forecasting) the big China energy companies have made CBM a top priority.

China National Petroleum [CNPC] has begun exploring a new CBM field in the Xinjiang Autonomous Region earlier this week.

This has little to do with the Olympics, because the well fields won’t be producing before the games commence, but it confirms CBM is quickly becoming an integral strategy China’s energy mix.

The Olympics is just a reminder that Beijing and China are getting serious about using cleaner fuels to power the country’s rapid GDP growth while also getting even more serious about reducing the country’s abysmal pollution.