Current situation and future expectations of petroleum, coal, rock and gas exploration and development

After an annual output of over 2 billion cubic meters, China National Petroleum Corporation (CNPC) has publicly announced for the first time the exploration and development status and future expectations of its newly developed natural gas variety - coal rock gas. PetroChina's definition of coal rock gas is: hydrocarbon gas that is generated by coal rock itself or transported by other gas sources to coal rock for storage, exists in both free and adsorbed states, and has a high content of free gas. It can be quickly produced and industrialized through reservoir transformation. Simply put, coal rock gas is an unconventional natural gas buried at a depth between coalbed methane and shale gas. Its depth is deeper than coalbed methane and shallower than shale gas. Some industry insiders describe it as deep coalbed methane developed using shale gas models.

At the 11th International Energy Development Summit Forum held on December 11, 2024, Li Guoxin, Deputy Chief Geologist and Party Secretary of the Exploration and Development Research Institute of PetroChina, pointed out that coal rock gas is a new unconventional natural gas that is different from coalbed methane and shale gas. It is expected that China National Petroleum Corporation's coal and rock gas production will reach 2.5 billion cubic meters in 2024, of which 2.3 billion cubic meters will come from the Ordos Basin. According to the current pace of exploration and development and production laws, by 2035, PetroChina's annual coal and rock gas production is expected to exceed 30 billion cubic meters, accounting for more than 10% of the country's total natural gas production.

However, the independence of coal rock gas still needs further confirmation. Currently, the regulatory authorities have not recognized it as a new independent mineral. Except for the PetroChina system, most practitioners tend to believe that it is a deeper buried coalbed methane. The shale gas revolution has changed the international natural gas production pattern, making the United States a natural gas exporting country. As of now, the development potential of coal and rock gas in China is comparable to that of domestic shale gas, but there is still a significant gap compared to the scale of shale gas development in the United States. However, the understanding of coal rock gas is still being explored, and PetroChina has high hopes for it.

Is coal rock gas a new mineral?

PetroChina believes that coal rock gas is a new type of natural gas that is different from coalbed methane. Although both are attached to coal seams, there are many differences between them. According to Li Guoxin's speech and previous press releases from PetroChina, the most significant difference between coal rock gas and coalbed methane lies in their burial depth. Coalbed methane is typically suitable for development at depths less than 1200 meters, while coal rock gas mostly exceeds 2000 meters. Secondly, the composition of coal rock gas is generally consistent with conventional natural gas, and the methane content in the hydrocarbon components of coalbed methane is greater than 98% to 99% (excluding non hydrocarbon gas statistics), generally without heavy hydrocarbons. In terms of mining methods, coalbed methane is mainly extracted through drainage. Firstly, drainage is required to reduce the pressure to the critical desorption pressure of the coal seam, which promotes the desorption of gas adsorbed on the surface of the coal seam pores. Then, it moves towards the low-pressure area and is extracted to the wellhead; The mining mode of coal rock gas is similar to shale gas, which can quickly obtain gas flow without long-term extraction, but requires maintaining reservoir pressure to ensure high production. Figuratively speaking, if coal rock is compared to a sponge, the water adsorbed on the surface of the sponge is like coalbed methane, and the water free inside the sponge is like coalbed methane. However, currently, except for PetroChina, most domestic and foreign natural gas industry professionals regard coal rock gas as deep coalbed methane and have not yet recognized it as a new type of natural gas.

The development process of coal rock gas

It was in 2005 that China first exploited deep CBM. At that time, Xinjiang Oilfield conducted gas testing on deep (more than 2000 meters) coal seam sections in the conventional oil and gas straight wells in Baijiahai area of the the Junggar Basin, and achieved a daily gas production of 7000 cubic meters. However, due to limited mining technology and high economic costs at that time, deep coalbed methane could not be sustainably developed. Until 2021, China Petroleum Coalbed Methane Company deployed a horizontal well in the Daji block on the eastern edge of the Ordos Basin, which produced 100000 cubic meters of gas per day after fracturing, demonstrating the commercial development potential of coal and rock gas. In 2022, PetroChina deployed high-risk exploration wells such as Nalin 1H, Jianan 1H, and Mi 172H in the Ordos Basin, with a daily gas production of 50000 to 100000 cubic meters, thus opening the prelude to large-scale exploration and development of coal and rock gas. On April 22, 2023, PetroChina officially named this new type of unconventional natural gas as coal rock gas at a seminar on deep coal rock gas exploration and development technology. By the end of 2023, PetroChina will establish the Daji Coal and Rock Gas Pilot Test Zone on the eastern edge of the Ordos Basin, with an annual output exceeding 1 billion cubic meters, making it China's first commercially developed coal and rock gas field. At the recent China Petroleum 2024 Oil and Gas Exploration Annual Conference, the exploration and development of coal and rock gas won the Special Award for Oil and Gas Exploration Discovery in the China Petroleum System 2024, becoming a new focus of China Petroleum's exploration and development. Li Guoxin stated that coal rock gas has a development history of about 20 years in China, and it was not until breakthroughs were made in shale gas development technology that the conditions for large-scale commercial development were met. At present, global research on coal and rock gas is still in its early stages. Based on the research results of Chinese geologists, the development prospects of coal and rock gas in the next 10 years are worth looking forward to.

The development potential of coal rock gas

Regarding the development potential of coal rock gas, Li Guoxin made the first disclosure on the aforementioned forum. According to its introduction, the preliminary assessment shows that the geological resources of coal, rock and gas exceed 30 trillion cubic meters, of which the resources in the Ordos Basin are about 20 trillion cubic meters, and the resources in the Tarim, Sichuan, Bohai Bay and Tuhaden basins all exceed 2 trillion cubic meters. Industry insiders generally recognize that coal and rock gas have significant reserves. Li Pengde, a member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference and Deputy Director of the China Geological Survey, mentioned in the "Proposal on Strengthening Comprehensive Exploration and Mining of Coal based Gas to Assist in Achieving Carbon Emission Reduction Goals" submitted at the 2022 National People's Congress and Chinese People's Political Consultative Conference that the potential resources of coal based gas in China reach 135 trillion cubic meters, including 28.05 trillion cubic meters of coal based gas resources buried below 2000 meters. Based on this calculation, the unconventional natural gas resources of coal, rock and gas with a burial depth of over 2000 meters recognized by PetroChina exceed 100 trillion cubic meters. Previously, the geological community assessed China's shale gas resources to be as high as 100 trillion cubic meters, with recoverable reserves of about 30 trillion cubic meters. This shows that China's coal and shale gas resources are comparable. However, it should be noted that the amount of resources does not equal the amount that can be developed. Li Guoxin stated that by 2024, PetroChina will have implemented nearly 2 trillion cubic meters of coal, rock, and gas tertiary geological reserves in the Ordos Basin, of which 502.3 billion cubic meters will be discovered. It is expected that the coal, rock, and gas production in the Ordos Basin will reach 2.3 billion cubic meters by 2024, and PetroChina's national coal, rock, and gas production will reach 2.5 billion cubic meters. The third level geological reserves include proven geological reserves, controlled geological reserves, and predicted geological reserves, which are key indicators for evaluating the development potential and economic value of oil and gas fields. Among them, proven geological reserves have the highest reliability and are commonly used in oil and gas reservoir evaluation drilling, development planning and design.

According to the "China Natural Gas Development Report 2024" released by the National Energy Administration, China's natural gas production in 2023 will be 232.4 billion cubic meters, a year-on-year increase of 5.6%, including shale gas production of 25 billion cubic meters and coalbed methane production of 11.77 billion cubic meters. China is the world's second largest shale gas producer. The United States, the world's largest shale gas producer, will produce 1.3 trillion cubic meters of natural gas in 2023, with shale gas accounting for about 80%. The commercial development of shale gas in China began at the end of 2012. The Fuling shale gas field under Sinopec is the first shale gas field in China with proven geological reserves exceeding one trillion cubic meters. As of December 2024, the Fuling shale gas field has submitted a cumulative proven geological reserve of 1018.88 billion cubic meters. Sinopec has discovered eight marine shale gas fields in the Sichuan Basin with a cumulative proven geological reserve of over 2.9 trillion cubic meters. In contrast, PetroChina is slightly inferior to Sinopec in shale gas development, but more active in coal and rock gas development. The key work of oil and gas exploration formulated by China National Petroleum Corporation in 2025 covers basic research in key areas such as coal and rock gas, superimposed basins, and ultra deep layers. However, some people in PetroChina have also pointed out that in the absence of comprehensive solutions to unconventional issues such as understanding, technology, and benefits, unconventional storage expansion needs to be carefully chosen and not blindly followed the trend. It is necessary to weigh the benefits.