Judy Clark
Associate Editor

China, where personal incomes have quadrupled in recent years while the country's burgeoning economy has grown fivefold, currently is consuming energy at a pace surpassed only by the US.
Holding the world's largest coal reserves, China burns it in abundance, with the result being that it also has one of the highest rates of pollution in the world. Because the Chinese government wants to clean up its air and increase the use of cleaner natural gas, it has budgeted more than $9 billion to boost gas usage to 8% by 2010 from 2% today. Part of that plan calls for natural gas to replace coal as the major source of electric power generation in Beijing by the 2008 Olympics.

Consequently, one of the fastest-growing sectors of China's energy industry is coalbed methane (CBM) extraction from its vast coal reserves. Among Western companies working with China in this pursuit are supermajors ChevronTexaco Corp., ConocoPhillips, and BP PLC.
And then there is the 2½-year-old, Houston-based independent, Far East Energy Corp., that currently holds a major interest in leases totaling more than 250,000 acres, making Far East Energy the third-largest holder of CBM acreage in China. Its holdings in northern and southern China could contain as much as 13 tcf of recoverable CBM.