COALBED METHANE--A NON- CONVENTIONAL ENERGY SOURCE · coalbed methane--a non-conventional energy source what is it and why is it important robert a. lamarre lamarre geological enterprises

COALBED METHANECOALBED METHANE----A NONA NON--CONVENTIONAL ENERGY SOURCECONVENTIONAL ENERGY SOURCE

WHAT IS IT AND WHY IS IT IMPORTANT

ROBERT A. LAMARRELAMARRE GEOLOGICAL ENTERPRISES

Fueling The Future25th Annual North American Conference of the USAEE/IAEE

Sept. 20, 2005

Natural Gas Production, Consumption, and Imports,1970 - 2025 (trillion cubic feet)

0

5

10

15

20

25

30

35

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Consumption

Production

Net Imports History Projections

0

1

2

3

4

5

6

Pipeline Liquefied Natural Gas

Natural Gas Net Imports, 2001 and 2025(trillion cubic feet)

2001

2025

(EIA)

0

2,000

4,000

6,000

8,000

10,000

12,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Gas

Pro

duct

ion

(mm

cfd)

Tight Gas

CBM

Conventional Gas

Major Growth in Production from Unconventional Resources

• Tight Gas - 2.3 bcfd in 2004 to 4.1 bcfd in 2010• CBM - 1.8 bcfd in 2004 to 3.9 bcfd in 2010• Conventional Gas - 2.5 bcfd in 2004 to 2.3 bcfd in 2010

Approx. 42% growth expected across the

Rockies

2005 - 2010

CBM offers the greatest potential with 116% volume

growth

Wood MackenzieWoodmac.com

Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003

Why Natural Gas?Efficiency

QAd1023

Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003

PREFERRED ENERGY SOURCE

COAL-FUELED ELECTRICITY-GENERATING PLANT AND CBM WELL IN UTAH

NATURAL GAS IS A CLEAN BURNING FUELNATURAL GAS IS A CLEAN BURNING FUEL

METHANE GAS PRODUCED FROM UNDERGROUND COAL BEDS

COALBED METHANE IS FORMED DURING THE COALBED METHANE IS FORMED DURING THE CONVERSION OF PEAT TO COALCONVERSION OF PEAT TO COAL

TimeTime

It all starts with Organic Debris or

• Peat in a Swamp

Pressure

Expelled By-Products• Water• Methane• Carbon Dioxide (CO2)

Heat

Residual Products• Coal• Methane• CO2

Coal

Coal is formed from peat over time by heat and pressure

ALL Consulting 2/04

PEAT SWAMP

COAL

PRESERVED TREE TRUNK

Natural Resources Law Center 7/02

GAS CONTENTS OF VARIOUS ROCKY MTN. BASINSGAS CONTENTS OF VARIOUS ROCKY MTN. BASINS

IDEAL RANK

(Scf/t)

CBM HAS BECOME AN IMPORTANT SEGMENT OF US GAS PRODUCTION

Conventional Natural Gas74%

Tight Gas Sands14%

Coal BedMethane

10 %Gas Shales

2%

U.S. CONSUMES 19 TCF OF GAS ANNUALLY

U.S COALBED METHANE PROVED RESERVES, 1989-2003

18.7 TCF

ROCKIES BUSINESS UNIT

UINTA3.2 TCF

SAN JUAN7.5 TCF

U.S. CONTAINS 703 TCF OF CBM RESOURCES

ARKOMA2.6 TCF

RATON1.8 TCF

POWDER RIVER25 TCF

GRN. RIVER3.9 TCF

WIND RIVER0.4 TCF

W. WASH0.7 TCF FOREST CITY/CHEROKEE

2.4 TCF ILLINOIS1.6 TCF

N. APPAL.11.5 TCF

CENTRAL APPAL.3 TCF

BLACK WARRIOR

PRODUCING

EMERGINGPLAYS

IDENTIFIED POTENTIAL

PICEANCE 7.5 TCF

GRI

U.S. CBM RESOURCES

• Greater Green River Basin 314 Tcf• Piceance Basin 99 Tcf• San Juan Basin 50 Tcf• Powder River Basin 30 Tcf• Uinta Basin 10 Tcf• Raton Basin 10 Tcf

TOTAL 513 TCF

Meissner

CBM IN U. S. LOWER 48 STATES

• 13 TCF PRODUCED• 18.7 TCF PROVED RESERVES• 42.3 TCF ECONOMICALLY RECOVERABLE• 101.2 TCF UNDISCOVERED• 703 TCF TOTAL RESOURCE ESTIMATE• >14,000 WELLS• 1.6 TCF PRODUCED IN 2003• >10% OF U.S. NATURAL GAS PRODUCTION

Data as of 12/03

Gas Molecule

ADVANTAGES OF COALS ASRESERVOIRS

Large gas storage capacityShallow depthsRelatively low costVery good economicsMost coal basins have been mappedAbundant data from logs of older wells

PRODUCTIVE STAGES OF ACOALBED METHANE WELL

(1)DEWATERING

STAGE

(2)STABLE

PRODUCTIONSTAGE

(3)DECLINE

STAGE

VO

LU

ME

TIME

TYPICAL PUMPING UNIT ON A CBM WELL

Schwochow, Oil & Gas Investor Supplement Coalbed Methane, Dec. 2003, page CBM-11

GAS PRODUCTION CURVES FOR CBM & SANDSTONE

COMPARISON OF GAS PRODUCTION CURVESExh. # 9

EXAMPLE OF SUCCESSFUL EXAMPLE OF SUCCESSFUL DRUNKARDDRUNKARD’’S WASH CBM PROJECTS WASH CBM PROJECT

0

200

400

600

800

1000

1200

0 10 20 30 40 50 60 70 80

PRODUCTION MONTH

MC

FD, B

PD P

ER W

ELL

0

20

40

60

80

100

120

140

160

180

200

# W

ells

Water Gas # Wells

NOTE DECREASING WATER RATES

MEANS LOWER OPERATING COSTS

NOTE INCREASING GAS RATES

MEANS MORE$$

From Sproule

6666 MCFD

No. of Wells vs Time MMcfd vs Time

www.eia.doe.gov/

NUMBER OF WELLS AND DAILY PRODUCTION VERSUS TIMEIN POWDER RIVER BASIN

365 BCF/YR

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

1995 1997 1999 2001 2003

CBM PRODUCTION IN UTAH

MCF

Thru April

102.2 Bcf

04

THE CRETACEOUS SEAWAY CONTAINS THE CBM PROJECTS IN THE ROCKIES

INTER

IOR

CR

ETAC

EOU

S SEAW

AY

RYER, 1988

Horne, RMAG 2003

TYPICAL COAL DEPOSITIONAL ENVIRONMENTTYPICAL COAL DEPOSITIONAL ENVIRONMENTFOR CRETACEOUS ROCKS IN THE ROCKIESFOR CRETACEOUS ROCKS IN THE ROCKIES

Coal

ShorelineSandstones

Swamp/Lagoon

Marine

POTENTIAL FUTURE COAL BEDS AND CBM

Natural Resources Law Center 7/02

MAJOR COALMAJOR COAL--BEARING BASINSBEARING BASINSIN THE ROCKIESIN THE ROCKIES

OVE

RTH

RU

ST C

OAL

SO

VER

THR

UST

CO

ALS

www.wsgsweb.uwyo.edu/

NNOO

PP

USGS PP1625B, 1999 Kirschbaum et al

COALCOAL--BEARING AREAS IN THE FOUR CORNERS REGIONBEARING AREAS IN THE FOUR CORNERS REGION

FERRON PLAY

CBM POTENTIAL INBLACK MESA BASIN

(No Tests)

SAN JUAN BASIN

PICEANCE BASIN

Horne, RMAG 2003

COALCOAL--BEARING CRETACEOUS FORMATIONSBEARING CRETACEOUS FORMATIONS

10,0

00 F

EET

Ryer, T.

PRODUCTIVE COAL SEAMS IN THE VERY SUCCESSFUL FERRON CBM PLAYOF EAST-CENTRAL UTAH

COAL

SCHEMATIC CROSS SECTION MESAVERDE DEPOSITIONAL SEQUENCE

SANDSTONE Reservoir

COALS Source & Reservoir

Top Seal

Bottom Seal

AN IDEAL “GAS MACHINE”

Meissner

COAL

COALBED METHANE

THE FUTURE LOOKS BRIGHT FOR CBM

ENERGY SUPPLY AND

ANCIENT SWAMPS