--> --> Historical Perspective and Future Opportunities of Coalbed Methane, by Andrew R. Scott; #90035 (2004)

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HISTORICAL PERSPECTIVE AND FUTURE OPPORTUNITIES OF COALBED METHANE

Andrew R. Scott
Altuda Energy Corporation, San Antonio, Texas
[email protected]

Unconventional resources such as coalbed methane will become progressively more important worldwide as population continues to grow at an unprecedented rate. Coalbed methane, or coal gas, has an unique and entertaining history as well as an optimistic future. Coalbed methane and other unconventional resources will undoubtedly play an important role in supplying energy needs to economically developed and emerging nations worldwide in the foreseeable future. Therefore, understanding the historical perspective of “traditional” unconventional resources becomes important in the development of “emerging” unconventional resources.

Combustible air has been known since ancient times, but probably the first true discoverer of manufactured gas was John Baptist van Helmont in Brussels, Belgium who, during his experiments in 1609, described a “wild spirit” which he called “gas”. The roots for coalbed methane can be traced back to the mid-1660’s to an English minister, Dr. John Clayton of Yorkshire, who performed experiments on heating coal in a closed vessel and noted “a spirit which issued out caught fire at the flame of a candle”.

Coal mine explosions have been known for centuries and making the gas associated with coal mining operations has always been of major concern. However, the first practical use of methane from coal mines comes from the Salton Pit of the Whitehaven Colleries located in the western United Kingdom along the Irish Sea. Coal mines in this area contained high and explosive levels of methane and numerous coal mine explosions have occurred. The Salton Pit mine was sunk in 1729 as possibly the first and largest undersea coal mine in the world and operated until 1847 when coal production ceased. Pockets of methane would often be encountered during mining operations and a bladder was used to collect “natural jets” of methane coming from the coal. The gas from the bladder was then directed toward a candle and found to burn with a strong flame. One ingenious engineer developed a system to pipe the gas to the surface where it was used to illuminate the pit head complex. The engineer then offered the gas for free to the town, but the Town Trustees turned him down.

Despite the early failures to recognize coal gas as beneficial rather than simply a mining hazard, Scotsman William Murdoch was the first to recognize the usefulness of coal gas as an illuminant in the late 1700’s. One evening, while relaxing by a fire he placed coal dust in his pipe bowl and noted that coal gases generated by the heat came out of the mouthpiece of the pipe and glowed brightly. He then experimented by heating coal in a large kettle with a tube attached to the spout. Lighting the gas coming out of the hole drilled in a thimble attached to the end of the tube produced a long jet of burning gas. Based on these experiments, Murdoch fitted up a retort in his house and by 1792 lighted every room in his house with coal gas. William Murdoch was discouraged from patenting his invention, but is considered by many to be the father of the natural gas industry. Coal gas remained an important illuminating source for the world until replaced by electricity.

The first true coalbed methane production in the North America is harder to pinpoint, but probably occurred in West Virginia, Ohio, Oklahoma and other locations in the early 1920’s and the 1930’s. The early discoveries were serendipitous and tapped into water-free coal beds on structural highs. These early wells were clearly targeted at coal seams and it appears that at least one operator may have applied the same exploration strategy in Ohio and West Virginia.

The Big Run Field in West Virginia was developed in 1932 and produced over 2 Bcf of coalbed methane from 25 or 30 wells and there are several other fields that apparently also produced coalbed methane. The Excello Shale Gas play in Oklahoma also tapped into a thin coal seam surrounded by carbonaceous shale so it too can be considered an early coalbed methane play. Once it was believed that the Mulky coal was the possible source of the “shale gas”, the area experienced a resurgence of drilling and completion activity in the late 1980’s to take advantage of the Section 29 tax credit. As of 1993, twenty-three wells had produced nearly 1 Bcf from the Excello Shale.

The first coalbed methane wells in the San Juan Basin were drilled by Stanolind (Amoco) in the 1950’s along the Ignacio Anticline and did not produce significant amounts of water because the coals were structurally high. Phillips Petroleum also drilled and completed wells in Fruitland coal seams during this time period and the San Juan 32-7 #6-17 well, completed in 1953, has been producing gas for more than 50 years with minimal decline in reservoir pressure. The first attempt at dewatering coal seams to produce methane was performed by Amoco in 1977 at the Cahn Gas Com #1 well in the Cedar Hill Field. The IP for the test wells was only 100 Mcfd with 100 bbl of water, but this production soon increased to more than 1 MMcfd by 1979 and the modern era of coalbed methane exploration and development was started.

The exploration for the coalbed methane industry received a very important boost through the Crude Oil Windfall Profits Tax Act of 1980 (Section 29 tax credit) that had provisions for a tax credit for gas production from unconventional resources such as coal seams and tight gas sandstone. It was not until 1986 when natural gas prices dropped that producers became interested in the tax credit. Originally, coalbed methane wells had to be drilled by December 31, 1992, but the time period to use the tax credit was been extended twice to December 31, 2002. Hopefully, such tax credits will be renewed and created for other unconventional resources to encourage continued exploration.

Preliminary worldwide coalbed methane resources are estimated to range between 5,800 and 24,215 Tcf. The largest potential resources, which also have the largest degree of uncertainty, are in the Former Soviet Union with 4,000 to 16,116 Tcf. North America ranges between 951 to 4,383 Tcf, whereas South America and Europe range from 15 to 32 Tcf and 161 and 269 Tcf, respectively. Africa ranges between 27 and 55 Tcf and the Middle East has no coalbed methane resources. The Asia Pacific region, which includes China, ranges from 646 to 3,360 Tcf. The rate of coalbed methane resource development within individual countries will be highly variable due to local economic factors and government energy priorities and policies.

Coalbed methane resources in the contiguous United States are estimated to be more than 743 trillion cubic feet (Tcf), more than 80 percent of which is located in the western United States. However, expanded exploration efforts into other parts of the country and better resource assessments will undoubtedly change these values. Coalbed methane resources of Alaska are estimated to be 1,034 Tcf making the total coalbed methane resources in the U.S. to be 1,777 Tcf. The annual production of methane from coal beds in the United States has increased from 10 billion cubic feet (Bcf) in 1985 to more than 1,614 Bcf in 2002. Coalbed methane now represents 8.3 percent of total dry gas production and 9.9 percent of proved dry gas reserves.

Demand for natural gas in the United States is expected to increase 50 percent over the next 20 years as additional co-generation power plants and natural gas electric power generation facilities are constructed. Enhanced coalbed methane recovery using sequestered greenhouse gases (carbon dioxide) and microbial conversion of the coal and sorbed gases into methane may represent a solution to solving energy and environmental objectives simultaneously. The development of “traditional” unconventional resources such as coalbed methane and “emerging” unconventional resources such as gas hydrates will become more important for meeting future energy demands, particularly as conventional resources continue to decline.