China United Coalbed Methane Corp Ltd has agreed to co-operate with Canadian firm TerraWest Energy Corp to jointly tap coalbed methane (CBM) resources in Northwest China's Xinjiang Uygur Autonomous Region.

According to a production-sharing contract signed in Beijing on Friday, TerraWest, a holding company of international energy, mining and environmental consultant Norwest Corporation, will shoulder risks and expenditures estimated at US$6 million during the exploration period.

The Canadian firm will then share production with China United during the development and production period, in accordance with their shares of investment.

The project, in the south of the Junggar Basin in Xinjiang, covers an area of 654 square kilometres. About 34.6 billion cubic metres of CBM are estimated there.

China United's President Sun Maoyuan said the agreement was the 24th one that his company has signed with foreign partners.

"Foreign companies have shown increasing interest in China's CBM resources," he said.

Last month, the Verona Development Corp, a Canadian firm specializing in exploration and development of CBM, signed a similar contract with Sun's company to jointly exploit the resources in North China's Shanxi Province.

Exclusive of this new contract, foreign companies had invested about US$150 million in China's CBM projects, Sun said.

CBM is a type of clean gaseous energy, which can be used as both chemical raw materials and fuel.

To prevent gas explosions, China emits 6 billion to 8 billion cubic metres of methane from mines annually, seriously polluting the environment and wasting energy resources.

Sun said development of coalbed methane can not only help reduce the high incidence rate of coal mine accidents, but also help narrow the gap of energy supply and demand in China.

China has rich CBM reserves. It is estimated that the country has between 30 trillion and 35 trillion cubic metres of CBM resources, located about no more than 2,000 metres underground.

Source: China Daily