Everyone's looking for fracking to revolutionize energy in China. They may be looking in the wrong place.

China has been trying to develop shale-gas technology, by having its major oil companies buy into U.S. firms to gain access to technology. China Petrochemical Corp. (SNP), for instance, agreed to pay more than $2 billion in January 2012 for a piece of Devon Energy Corp.'s (DVN) shale-oil fields, the Wall Street Journal reported. More recently, ConocoPhillips (COP) signed an agreement with China Petrochemical to explore the potential for shale-gas in the Sichuan Basin.

Unfortunately, according to report released yesterday by Nomura, "[shale] gas is at an early stage of exploration and we do not expect any meaningful supply until 2015."

But what if China has better options than fracking? The strategists believe it does: syngas.

What's syngas? I'll let the strategists explain:

China is turning to a familiar resource – coal – which it has in abundance and which can be used to produce manmade gas.

Syngas (synthesis gas) refers to coal gas produced from coal gasification or clean coal technology. It is man-made, but the chemical component is comparable to natural gas; the CO2, NOx and other pollutant emission is in line with global standards. Syngas can be used for town gas and CNG/ LNG, gasoline/diesel substitute, petrochemical feedstock and power generation.

Better yet, the analysts write, "[the] technology is considered stable and the economics are superior in China. Given CNY250/ton of local coal input costs, we estimate syngas production cost at USD7-8/mcf vs imports at USD13-17/mcf."

The companies best poised to benefit from syngas include Sinopec, Datang, Shanghai Electric and China Everbright, Nomura says.