Coalbed Methane Poised to Fill Energy Gap

Title: Coalbed Methane Poised to Fill Energy Gap
Author: Robert A. Lamarre, Lamarre Geological Enterprises, LLC
Publication: The Outcrop, May 2003, p. 1, 6

Despite uncertainty due to environmental concerns and erratic natural gas prices, the coalbed methane industry is strong and growing. Today, coalbed methane (CBM) provides about 7% of the total natural gas production in the U.S. and contributes about 10% of the total U.S. natural gas reserves. CBM wells have produced more than 10 Tcf since 1984 and account for more than 13.5 Tcf of proved reserves. The total CBM resource estimate exceeds 703 Tcf, with recoverable resources exceeding 145 Tcf. CBM production in 2000 was 1.35 Tcf from 13,986 wells. The total U.S. natural gas usage in 2000 was 19.3 Tcf and the demand in 2020 is estimated to be 29 Tcf. CBM exploration and development continue to grow to fill this 10 Tcf/year gap. Most of this increase in natural gas usage comes from natural gas-fired electricity generating plants. Ninety-five percent of the new electricity-generating plants installed in 2000 were fueled by natural gas. Ninety-three percent of those planned for future construction will also use natural gas as the fuel of choice. This large increase in demand is due to the lower cost and shorter construction times for natural gas-fueled plants as well as the environmental benefits of this cleaner burning fuel.

Most CBM production comes from five major areas in the US: Black Warrior Basin in Alabama, San Juan Basin in Colorado and New Mexico, Raton Basin in Colorado and New Mexico, Powder River Basin in Wyoming and Montana, and the Ferron Play in Utah. The San Juan Basin is the largest CBM producer in the world and will continue to be so due to infill drilling on 160 acre spacing that is just beginning. Some recent infill wells are showing nearly virgin reservoir pressure even after many years of production from the initial well in the spacing unit. Peak production from the basin was achieved in 1999, and in 2001 it produced 2.53 Tcf from 4500 wells. The basin may have a resource potential of 84 Tcf. Evergreen Resources continues to develop the Vermejo and Raton coals in the Colorado portion of the Raton Basin, while El Paso is actively drilling in the New Mexico portion of the basin. The basin had produced 100 Bcf by the end of 2000. Evergreen has 675 wells producing 120 MMcfd. The Ferron Trend in central Utah has produced more than 530 BCF of gas from Ferron coals since its discovery about 10 years ago. As of July 2002, 692 wells were producing approximately 300 MMcfd. Drilling activity in the Powder River Basin has decreased lately due to restraints while an EIS is being completed. The EIS is studying the impact of drilling 45,000 additional CBM wells in the basin and it is anticipated that the EIS will be competed in the second quarter of 2003. Disposal of produced water has become a major concern in the basin, so operators are being required to submit water disposal plans for beneficial use of the water. Despite the slowdown in the basin, activity should rebound due to the large available resource and low drilling and completion costs. During 2002, 6,954 wells produced 849 MMcfd. Recoverable reserves in the basin may exceed 39 Tcf. The Black Warrior Basin has produced more than 1 Tcf of CBM and drilling continues to enlarge the productive area.

CBM exploration activity continues throughout the Rockies and mid-continent regions. CBM resource estimates for the Greater Green River Basin of Wyoming and Colorado exceed 314 Tcf of gas-in-place. A number of operators are drilling the Atlantic Rim play on the eastern margin of the Washakie Basin, in Carbon County, Wyoming. most of the activity is fueled by the success of Double Eagle Petroleum at Cow Creek Field, where one well is producing almost 1 MMcfd from Almond coals at depths of less than 1500 feet. Over-pressured coals with very good permeability help to make this play very exciting. Success has been reported in Mesaverde coals on the LaBarge Uplift and east of the Rock Springs Uplift. Operators continue to evaluate the Mesaverde and Frontier coals east of the Overthrust Belt, south of Kemmerer, Wyoming. Many players have attempted to get economic production from Williams Fork coals in the Sand Wash Basin, but high water rates have proven difficult to overcome.

In the Hanna Basin, Dudley & Assoc. has received enough positive data on their Seminoe Road CBM project to begin an EIS. Evergreen Resources has drilled eight wells on their two-Tcf prospect northeast of Anchorage, Alaska. Total estimated recoverable CBM resources in the state are 1000 Tcf. Large CBM resources in the Piceance Basin have prompted many operators to try to find the key to unlocking the low-permeability coals of this basin. A few prospects have been identified on the shallow margins of the Wind River Basin. Rank CBM wildcat plays are being identified in the North Park, Albuquerque, Western Washington, Williston, Kapairowits and Black mesa Basins. Let’s hope that some of this creative exploration will lead to significant discoveries for the future.

Interest in Pennsylvanian-age coals in the Forest City/Cherokee Basins of Kansas and Oklahoma is driving a land play there. Per well reserves are relatively low due to very thin coals spread out over a large stratigraphic interval. However, the play is heating up due to low drilling costs at depths ranging from 500 feet to 2000 feet, identification of a good water disposal zone, abundant pipeline and facilities in place, relatively easy permitting and good gas prices. Individuals and small independents are the current players in these basins.

Are you interested in learning more about this rapidly-growing source of natural gas? If so, then plan to attend the 4th Annual CBM Symposium at the Downtown Denver Marriott Hotel on Tuesday, June 10th. A four-day field course on “Geology and Stratigraphy of Coals of the Frontier through Almond Formations in the Rock Springs-Kemmerer, Wyoming area,” to be led by John Horne, is being offered following the Symposium on June 11 to 14. To register for the Symposium or Field Course, please see page 14, or visit RMAG’s website at http://www.rmag.org.