Green Dragon Gas, a
London-listed clean energy play, appears to be executing well on its
strategy of extracting methane from China's coal fields, according to
its latest update.
Ten wells have been successfully drilled through the targeted coal
seams so far and an additional twenty eight wells are expected to be
drilled in the current phase.
updates from resources companies are almost incomprehensible for the
lay readers, so anyone who is really interested can read the official
release here (pdf).
But the key point is that the Aim-listed company is not putting all
its eggs in one basket — it is drilling in five separate basins in
Shanxi, Jianxi and Anhui provinces — and each of the wells drilled has
met or exceeded expectatins.
Coal bed methane (CBM) is extracted by drilling holes into coal
seams and capturing the gas. CBM has several attractions in China, not
least its huge potential due to large number of coal mines. According
to Green Dragon, China ranks third in the world for CBM resources
behind Canada and Russia.
This is also deregulated market, at least in theory, so Green Dragon
can sell its gas whoever pays the best price. In addition, CBM projects
can qualify for carbon credits because to extract the methane, CO2 is pumped into the mines.
Another factor in favour of CBM is China's clean energy policy,
which has led to the construction of new gas-fired power stations to
reduce traditional heavy dependence on coal for electricity generation.
However, many of these new plants are idle because of a lack of gas.
Green Dragon's CEO, Randeep Grewal, attributes Green Dragon's
drilling success in gruelling weather to three factors: dedication,
team work and those oh so important “guanxi”.
Finance Asia has a good interview with Grewal here (pdf).
More on Green Dragon in this earlier EngagingChina story.