An approach to grading coalbed methane resources in China for the purpose of implementing a differential production subsidy

Abstract

The heterogeneity of coalbed methane (CBM) resources was not taken into account when the current indiscriminate subsidy policy was developed. In it, limited subsidy funds are given first to high-quality resources and even to subsidize profitable projects. Thus, the policy has had less than the intended effect in improving CBM production. To implement a new type of differential subsidy, it is necessary to grade the CBM resources, as will be discussed in this paper. After the factors affecting the resources value are systemically examined, sorted and merged, the relationship between the key factors and economic value is analyzed by an engineering economics method, and the production profile type, peak production (or stable production) and buried depth are used as grading factors. The production profile type is used to categorize, and peak production and buried depth are used to grade resources within the same category. The grading method is as follows: use subsidy levels at the economic critical point (NPV = 0) to identify the grades of resources, and determine the combination of peak production and buried depth for different resources grades base on indifference curves drawn according to the relationship between the economic value and peak production and buried depth.

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