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Big coalbed methane play up for grabs
Gary Park Petroleum News Canadian Contributing Writer
The largest coalbed methane play in North America (based on reserve size) will be put to the test Dec. 14 when Alberta holds its largest land sale in close to six years.
More than 1 million acres will be on the block, dominated by the Mannville coalbed methane seams in central Alberta.
For many industry observers, they represent a substantial gamble given that companies are still working on the technology to turn the Mannville play into a commercially viable prospect.
They caution that heavy research and development spending will be needed to develop a formation that contains a possible 300 trillion cubic feet and note that operational costs for the deeper, wet Manville coals could be three to four times greater than the C$250,000 for Alberta’s Horseshoe Canyon play. Corbett Creek project commercial For now, Trident Exploration, with joint venture partners Nexen (40 percent) and Red Willow Production (10 percent), has declared the Mannville’s Corbett Creek project to be commercially profitable and announced plans to spend C$400 million over the next 18 months.
“They obviously have something there that’s encouraging,” said Mike Dawson, president of the Canadian Society for Unconventional Gas, when the announcement was made in August.
But he said the resource potential in the Mannville offers a reasonable chance of kick-starting Alberta’s second coalbed methane play after Horseshoe Canyon.
Nexen Chief Executive Officer Charlie Fischer said the partnership’s 320,000 net acres contained about 3 tcf of gas-in-place that should produce 150 million cubic feet per day by 2011.However, Trident will not say whether it intends to be the major bidder in the Dec. 14 sale.
Coalbed methane has made rapid strides in Alberta over recent years, with production now at 200 million cubic feet per day and headed for 500 million in 2006. Coalbed methane well completions are expected to pass the 3,000-mark this year.
Although coalbed methane is a tougher challenge than conventional gas, once it comes on stream it has a longer life than a conventional well because coals have up to 20 times more gas.
FirstEnergy Capital estimates that coalbed methane needs gas prices of US$4.25 per thousand cubic feet to achieve a return of at least 10 percent.
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