Why look to Arctic when huge coalbed methane reserved in backyard

Energy Processing Canada, Sep/Oct 2001

It might be the next big thing, but it's still in its infancy in Canada. Coalbed methane - produced when coal is fractured and exposed to low pressures - accounts for up to 12% of natural gas output in the United States. There is no commercial coalbed methane production in Canada.

Ian Sinclair, of Calgary-based GTI E&P Services Canada, estimates there are between 350 trillion cubic feet and 3,200 tcf of coalbed methane reserves, just in Alberta. By comparison, there are 9 tcf of natural gas found in the Mackenzie Delta. And while it will cost billions of dollars to bring arctic gas to market, coal deposits are located near existing processing plants and transmission lines.

"There have been approximately 360,000 wells drilled in the Western Canada Sedimentary Basin, with a minimum 10% of those drilled through a coal seam," he explains. "A coalbed methane well can have a long life - 20 to 25 years of production."

Coalbed methane is 90% methane, with the rest comprised of ethane and propane and odd amounts of carbon dioxide and nitrogen.

Companies that have started coalbed methane pilot projects or are studying the potential of this resource include: the former PanCanadian Petroleum Ltd., now called PanCanadian Energy, Burlington Resources Inc., Devon Energy Corp., Canadian Natural Resources Ltd., Alberta Energy Company, Nexen Inc. and Penn West Petroleum Ltd. Says Sinclair,"The Alberta Research Council is a world leader in this field."

There are, of course, obstacles and technical difficulties to overcome:

It's a highly competitive business because of land availability;

Some conventional drilling techniques can be used, but one big obstacle is removing water buried in the coal; and

There are permeability concerns.

Nonetheless, Burlington is spending up to $10 million on two coalbed methane projects in Canada: in west-central Alberta and northeastern B.C. Northstar Energy, a subsidiary of Devon Energy, is studying five potential projects in Alberta and B.C.According to a study by FirstEnergy Capital Corp., Canadian producers could spend as much as $8 billion on coalbed methane projects in the next 15 years.

Interest continues to build.The first two annual coalbed methane conferences, presented by the Canadian Coalbed Methane Forum, only attracted about 50 delegates each. This year's event, October 10 - 13, expects about 400.