Wealth of 'flammable ice' untapped under the sea

Analysts said little interest from State-owned companies to join the hunt is an important factor that is deterring the development of the energy resource.

Shenhua Energy, a subsidiary of the State-owned Shenhua Group, China's largest coal miner, leads the way in pursuing onshore hydrate gas.

In 2012, Shenhua Energy signed a contract with Qinghai China Coal Geological Engineering, planning to invest about 66 million yuan ($11 million) to explore for hydrate gas in a coalfield in China's far northwest Qinghua province.

It is the second time that Shenhua has ventured into Qinghai to try to exploit hydrate gas. The first time was in 2011 when the company partnered with the local government of Qinghai and carried out preliminary tests. But nothing much happened after the initial move, reports said.

Lin said economics is the biggest reason for the lukewarm interest shown by State-owned companies because hydrate gas development and production cost more than any other unconventional gas and suffer from a longer period of profit return.

"In addition, there is a huge environmental risk from commercializing the methane hydrates, which contain extremely high volumes of CO2. If it leaks into the air during collection and processing, it can cause not only an explosion but add to the greenhouse effect," he said.

Han Xiaoping, chief executive officer and founder of china5e.com, a major online portal for energy companies, forecast that by as early as 2040s, China could realize the commercial development of the methane hydrates.

"Clearly, these are only the early days in the exploration of methane hydrates, but China is already advancing in the race against other countries as the nation pushes very hard to put the compound in the country's future energy picture," he said.

China formally started studying gas hydrates 15 years ago, when the country listed them as part of a national research program.

Japan, which has few large energy resources, is probably the only country that has extracted gas from hydrate deposits, according to Reuters.

The State-owned Japan Oil, Gas and Metals National Corp last year completed a test to produce methane gas from offshore hydrate formations for the first time, using extraction techniques pioneered in Canada.

Other countries involved in ongoing hydrate research include South Korea and India. Methane hydrate, also called methane ice or methane clathrate, consists of methane enclosed in frozen water.