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Coal Bed Methane

Coalbed Methane (CBM) is formed by the same processes which transform organic material into coal; generally speaking, the deeper and/or higher the rank of the coal, the higher is its methane content.

Assessing CBM resources is generally a matter of identifying the in situ gas contents of the coal and multiplying this by the coal resource. Determining recoverable reserves, however, is much more involved. Additionally, geo-technical constraints in gas production - most notably low permeability - make much of the worlds resources very difficult to recover.

With natural gas reserves becoming scarcer and prices rising, CBM is an area of intense commercial interest. In the United States and Australia, this resource has a proven track record of growth and there are few uncertainties regarding the application of basic CBM drilling technologies to provide good results. Beyond these countries, there has been heightened focus in China, India, Indonesia and Colombia, to name just a few areas of the world.

The potential is great, although project developers and investors should be aware that some fundamental geotechnical issues might mean that venturing into areas with little field experience poses a number of risks.

While global coalbed methane resource estimates are rough, they indicate between 34 and 261 Tcm, which compares with proven natural gas reserves of 180 Tcm. The experience of the U.S. indicates that, relative to conventional gas reserves, CBM reserves are becoming an ever growing share of total gas reserves. However, global resource estimates for coalbed methane are poor, partly because the resource has only had significant commercial success in the United States, and partly because the data are very limited on gas properties of coal around most of the world.


Country Proved Coal Reserves (Gt) CBM Reserves (Tcm)
Australia 77 8-14
Canada 7 6-76
China 115 30-55
Former Soviet Union 222 20-116
Germany 7 3
India 56 1
Indonesia 4 <1
Poland 8 4
South Africa 48 1
USA 243 11
Other 60 NA


Global CBM development will require significant attention to assessing reserves and considering the optimal technological approach to exploit this challenging resource. Companies and governments will need to devote significant resources to exploring basin-wide characteristics before being able to make prudent investment decisions.

An assessment of the political and regulatory environment is critical, as often jurisdictions have found it complicated identifying the appropriate licensing or ownership rights framework for CDM and this has spelled the death of a number of otherwise promising projects.

Technologies to exploit CBM may be key to turning marginal CBM properties into good prospects. A hazard, however, is to believe that the newest technology (especially from the U.S. or Australia where coals are generally more permeable) will be appropriate in less explored coals.

Energy Edge Partner Karl Schultz has been working in the CBM community for over a decade and is an internationally-recognized expert on the issues surrounding this nonconventional fossil fuel source.  If you would like to discuss CBM further, please contact him today.

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