Alberta gets a fix on CBM potential

But no idea how much of 500 trillion cubic feet is recoverable

Gary Park

Petroleum News Calgary correspondent

Coalbed methane proponents have a new number in their sights as coalbed methane struggles to gain recognition among Canada’s energy resources.

Two scientific reports by the Alberta Geological Survey, a division of the province’s Energy and Utilities Board, have estimated the maximum coalbed methane in-place for the Alberta plains and foothills at 500 trillion cubic feet, about 12 times Alberta’s established remaining marketable conventional gas reserves of 42 tcf, although the ultimate recoverable is listed at 200 tcf.

Until now, the estimates have varied from 100 tcf to 1,000 tcf.

The studies are described as the most comprehensive scientific data available in Alberta about coalbed methane and are designed to encourage development of an untapped resource at a time when the conventional storehouse is in a troubling decline.

The Energy and Utilities Board said there is growing recognition that coalbed methane is “poised to play a bigger role in meeting the demand for natural gas ...”

But it acknowledges that the amount of coalbed methane that can actually be recovered with current technology and based on economic conditions is unknown.

Andrew Beaton, a geologist with the Alberta Geological Survey, said the studies, compiled from proprietary research and with industry help, will correct the “lack of basic data” available in the public domain.

He said the hope now is that there will be further defining and refining of the numbers to speed up development of the resource.

For now, despite the participation of most leading E&P companies in various programs, coalbed methane production in Canada is estimated at no more than 25 million cubic feet per day, although the National Energy Board has projected that will grow to 1 billion cubic feet per day by 2010 and 2 bcf per day by 2020.

Even so, companies are cautious about releasing their plans and engaging in prediction on the ultimate potential of coalbed methane.

MGV Energy has pioneered production

It is targeting output of 15 million cubic feet per day by the end of 2003 as it continues exploration and pilot programs in its six joint ventures covering 450,000 acres.

Others in the field include EnCana, which expects to spend about C$200 million over 12 months drilling 150 wells in southeastern Alberta. Current production is about 3 million cubic feet per day.

Nexen, in partnership with Trident Exploration and Red Willow Corp., has planned to sink up to C$25 million into coalbed methane this year, including C$13.4 million to acquire coalbed methane-prospective land. It has 14 producing pilot wells, but won’t disclose volumes.

Devon Canada has tagged C$10 million for coalbed methane spending as it continues work on a 10-well program; Talisman Energy is operating a joint venture with CDX Canada; and Connaught Energy is operating a five-well pilot project with Petrobank Energy & Resources and Birchill Resources and has a second joint venture with Calver Resources.

Government changes introduced

Although British Columbia has offered incentives and legislative changes to stimulate the extraction of coalbed methane from coal reserves, it is lagging behind Alberta, with only about four E&P companies active in the province, compared with 25-30 in Alberta, partly because of unresolved land issues.

Alberta is moving cautiously on the regulatory front, appointing a cross-ministry steering committee to develop a public consultation process that the Energy and Utilities Board says “may influence future CBM regulations.”

Barbara Thomas, a senior policy adviser with British Columbia Energy & Mines, told a conference in October that a deal being negotiated with British Columbia coal companies will resolve a drawn-out dispute by recognizing coalbed methane ownership in favor of petroleum and natural gas rather than coal.

That should “facilitate” coalbed methane development in 308,000 acres of freehold coal lands, about 70 percent of which is held by five coal companies.

Mike Gatens, chairman of the Canadian Unconventional Gas Association, told a September meeting that Canada has little hope of closing the gap on the U.S. production of unconventional gas until governments offer fiscal incentives to boost coalbed methane and other sources.

He said the United States showed the way in the 1980s when it provided temporary tax incentives to counter dwindling conventional gas supplies. As a result, 130,000 wells yield a total of 18 bcf per day of unconventional gas in the United States, almost matching Canada’s total gas production, with coalbed methane accounting for about 25 percent.