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Although mines in the US have been venting coal gas intentionally since the 19th century, the production and sale of methane from coalbed wellbores is a relatively recent development. Methane was produced from a few coal seam wells in Wyoming, Kansas, and West Virginia during the early part of the twentieth century; however, the first deliberate attempts to complete wells as coalbed-methane (CBM) producers did not occur until the early 1950s in the San Juan basin of New Mexico. These wells targeted the Fruitland coal seams, which previously were viewed as a high-pressure hazard overlying deeper conventional oil and gas targets. Gas production development from the Fruitland coal seams languished until the mid-1970s when an energy crisis in the U.S. encouraged feasibility studies and investment. In the late 1970s, several companies completed wells in the Fruitland coal seams and found high gas contents and production rates of several hundred Mscf/D. At approximately the same time, several dozen CBM wells were drilled to degas coal seams adjacent to mines in Alabama’s Black Warrior basin.
Development of the coalbed methane (CBM) industry
This early development work received a huge boost in 1980 when a US federal tax credit was introduced for nonconventional fuel sources. This tax credit ignited a research and drilling boom throughout the 1980s, which resulted in approximately 5,500 US CBM wells by 1992. This expansion was facilitated by service companies and pipeline infrastructure that were already serving conventional gas wells. Although the tax credit for new wells expired in 1992, CBM development continued at a strong pace. Commercial projects involving hundreds of wells, such as those in the Uinta and Powder River basins of the western U.S., were developed in the 1990s without the benefit of these tax credits. In 2000, the US CBM industry reported proven reserves of more than 10 Tscf for approximately 10,000 producing wells.
As the CBM industry developed in the US, companies began to look worldwide for additional opportunities. This is a natural progression given that, as Table 1 shows, approximately 84% of the world’s coal resources are outside the US. More than 300 exploration core holes and production test wells have been drilled in at least 15 different countries in search of development opportunities. By 2000, the only non-US commercial CBM production has come from two relatively small projects in the Bowen basin of Queensland, Australia. International development has been hampered by numerous factors including unfavorable reservoir conditions, governmental policies, the absence of gas infrastructure and markets, and the lack of a readily available hydrocarbon service industry. Nonetheless, exploration continues in several countries, spurred on by government incentives, advances in technology, and a greater demand for natural gas.
Characteristics of successful CBM projects
A useful first step in the characterization of any new coal area is to compare its characteristics with those of successful CBM projects. Table 2 summarizes the characteristics of several successful projects in the US and includes parameters related to reservoir properties, gas production, gas resources, and economics. The table shows that successful projects have many similarities, including high permeabilities and high gas resource concentration; however, the table does not include aspects such as government incentives or high-value markets, which could elevate a marginal project to commercial status.
Comparison with conventional gas reservoirs
Unlike conventional reservoirs, coal seams are the source, trap, and reservoir for CBM. A comparison of the two reservoir types shows profound differences in reservoir properties, storage mechanisms, flow mechanisms, and production profiles. CBM reservoirs are layered and contain an orthogonal fracture set called cleats, which are perpendicular to bedding. Because the coal matrix has essentially no permeability, CBM can be produced economically only if there is sufficient fracture permeability. Relative to conventional gas reservoirs, coal seam permeabilities are generally low and may vary by three orders of magnitude in wells separated by distances of less than 500 m. Because of the low permeabilities, hydraulic fracture stimulation or cavity completions are required for efficient production.
Coal gas is generated in place and is sorbed physically to the coal. Because coal has a large amount of microporosity, the surface area available for sorption is huge. It is estimated that one kilogram of coal contains a surface area of more than 100,000 m2.2 CBM reservoirs can hold two to three times as much gas as a sandstone reservoir at the same pressure. Initially, the cleats are filled with water and/or gas, creating pressure that keeps the sorbed gas bound to the coal. Producing wells lower the pressure in the cleats, causing gas to desorb from the coal matrix. Most CBM wells initially produce large volumes of water and small volumes of gas. Over time, the produced water volume decreases, and the gas rate increases. This is the opposite of conventional gas wells, which are characterized by high initial gas rates that decline with time.
Appraisal and development strategy
It is important to collect and interpret high-quality data early in the life of a CBM project to determine commerciality quickly and to generate a cost-effective development plan. Reservoir description work must be conducted to determine:
- Coal thickness
- Lateral continuity
- Structural position
Reservoir engineering analyses are needed to determine:
- Gas content
- Saturation conditions
- Sorption isotherm values
Operations engineering must demonstrate that wells can be successfully drilled, completed, stimulated, and produced.
The first step in appraising a new area is to collect all relevant information from:
- Conventional wells
- Mining operations
- Mining core holes
- Geophysical surveys
- Geologic mapping
- Remote sensing studies
These data should be compared with the characteristics of producing CBM reservoirs to estimate the range of possible gas rates and reserves. The collected data can be used to identify the prospective areas in a basin and determine appraisal well locations. Appraisal wells then can be drilled to core, log, test, and produce the coal seams. These wells determine if there is sufficient coal thickness, gas content, and permeability to justify a pilot project.
Pilot wells should be drilled in a closely spaced five- or nine-spot pattern that includes an isolated center well. The close spacing will quickly determine if dewatering is possible and if significant quantities of gas can be produced. The pilot project then can be expanded to ensure that gas can be produced economically at a development well spacing. A properly designed pilot well program should include the opportunity to test different completion, stimulation, and artificial lift methods. A detailed reservoir surveillance plan should be created to accumulate routine production, pressure, and fluid entry data over time. Numerical simulation studies should be conducted to:
- integrate and reconcile all the collected data properly
- determine the reservoir mechanisms
- evaluate the appropriate development well spacing and pattern geometry
- forecast whether commercial rates will be achieved
Future trends in CBM development
The vast majority of CBM activity between 1975 and 2000 has been concentrated in the US, where numerous basins have been developed commercially. This trend will continue in the near future as activity accelerates in the Raton, Arkoma, Powder River, and Appalachian basins, among others. Frontier areas in North America, including Alaska and Canada, have been the focus of considerable activity in recent years and are likely to generate a number of commercial projects.
In other parts of the world, CBM growth has been slow and is likely to remain so. In the late 1980s and 1990s, there was great optimism that prolific CBM basins similar to the San Juan basin could be found all over the world. To search for these, more than 300 appraisal wells were drilled in at least 15 different countries, resulting in only a few small commercial projects in the Bowen basin of Australia.
The primary reason for these international failures has been poor reservoir characteristics. It is now clear that a number of critical elements must be favorable to produce CBM at commercial rates. These elements include:
- Coal thickness
- Gas content
- Gas saturation
- Sorption isotherm characteristics
- Aquifer strength
Given this large number of variables, it is not surprising that two or more of these are unfavorable in most CBM prospects, resulting in subeconomic or marginally economic gas rates.
International development also has been hampered by governmental policies, the absence of gas infrastructure and markets, and inadequate hydrocarbon service industries. Over the next 20 years, there are likely to be dramatic, positive changes in each of these areas. International trade and banking organizations will help upgrade and liberalize foreign markets for investment, while various nations are likely to provide incentives that encourage further exploration and production. Model contracts and terms will become more standardized, which will streamline negotiation and approval processes. Technology transfer and foreign investment will improve the hydrocarbon service industries, making them more efficient and effective. However, there will still be problems caused by political instability, bureaucracy, market volatility, increased regulation, and other forces.
Choosing a CBM project
Only companies with strong technical and commercial skills are likely to be successful in pursuing international CBM opportunities. Most opportunities will be characterized by incomplete technical information of poor quality, which will require experienced technical staff to identify key data that indicate whether a project has good or poor potential. The technical and operations staff also must have the ability to generate and execute effective work programs that minimize the time and money required to evaluate a project. Successful companies will be characterized by world-class expertise in specific disciplines including reservoir characterization, reservoir engineering, and operations technologies. Table 3 reviews the areas of focus for CBM research and development. Research over the next decade will focus on these key areas and provide additional tools for understanding and exploiting CBM resources.
In addition to strong technical skills, the most successful companies will apply their financial expertise to quantify the uncertainties associated with each CBM project. These uncertainties are best understood through risk analyses, which help determine whether the best course of action is to purchase, appraise, develop, or divest an asset. Risk analyses integrate the technical evaluation, the country-specific financial model, and the company’s strategy to determine the value of a project relative to others in the corporate portfolio. This leads to better decision making and financial results. Companies also will benefit greatly from creative financing and marketing solutions. For example, to attract a high-value gas market, a company may couple a conventional and a CBM gas project. The conventional gas project will supply gas on the front end, while the CBM project will replace the conventional gas in later years, ensuring a long, stable gas-rate plateau.
Environmental issues and the CBM industry
Environmental issues undoubtedly will exert a greater influence over the CBM industry in the next 25 years. Some of these issues will be problems for the industry, such as surface disturbances from drilling and development, the depletion of coalbed aquifers previously used as a residential or commercial water source, and the updip migration and seepage of methane from outcrops because of coalbed dewatering. Other environmental issues will present opportunities, such as the need to replace coal combustion, sequester CO2 , or capture methane that would have escaped during mining activities. For example, the need to reduce CO2 emissions from a large coal-fired power plant can be achieved by injecting the CO2 into an adjacent coalfield for enhanced gas recovery. Incentives associated with these opportunities will help foster expansion of the CBM industry.
Future advances in the CBM industry
The CBM industry is still relatively immature, and much remains to be learned. The Powder River basin, which contains low-gas-content, immature coals that were thought to be uneconomical a decade ago, is a good example of the changes occurring within the CBM industry. Many of the industry’s advances will depend on rapidly evolving drilling, stimulation, and enhanced recovery technologies. Combining these technologies with investment incentives, favorable regulatory policies, and other projects, such as conventional or CO2 sequestration, is critical for developing new CBM resources.
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- Rogers, R.E. 1994. Coalbed Methane: Principles and Practice, 345. Englewood Cliffs, New Jersey: Prentice Hall.
- Zuber, M.D. and Boyer, C.M. II. 2001. Comparative Analysis of Coalbed Methane Production Trends and Variability—Impact on Exploration and Production. Proc., Intl. Coalbed Methane Symposium, Tuscaloosa, Alabama, 245–256.
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- Pashin, J.C., Groshong, R.H. Jr., and Carroll, R.E. 2001. Enhanced Coalbed Methane Recovery Through Sequestration of Carbon Dioxide: Potential for a Market-Based Environmental Solution in the Black Warrior Basin of Alabama. Proc., First National Conference on Carbon Sequestration, Washington, DC.
- Jenkins, C.D. 2003. Technology: Catalyst for Coalgas Growth. Presented at the SPE Applied Technology Workshop on Coal Bed Gas Resources of Utah, Salt Lake City, Utah, 24-25 October 2003. SPE-87358-MS. http://dx.doi.org/10.2118/87358-MS.
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