Industry presses ahead with CBM drilling in Alberta

Gary Park

Petroleum News Calgary correspondent

While the Alberta government tries to shape regulations covering coalbed methane development, the industry is showing it is no longer prepared to wait.

Energy Minister Murray Smith expects final recommendations from a multi-stakeholder advisory committee this November, by which stage more than 1,000 coalbed methane wells will have been drilled and production could be in the range of 60 million cubic feet per day. Noting that natural gas in coal seams has “considerable potential as a future source of supply, revenue and jobs for Albertans,” Smith also said it is “imperative” for the government and industry to “get it right” on the regulatory front.

“We want to learn from the experiences of other regions and from the wells that have been drilled so far in Alberta on order to promote responsible, sustainable development.”

The advisory committee is intended to help the government consult with landowners, agricultural producers, environmental groups and the energy industry.

Smith’s department, along with other government departments and Alberta’s Energy and Utilities Board, launched a review of coalbed methane in October 2002 to ensure regulations achieve a balance between economic benefits while protecting land, air and water resources.

Whatever recommendations emerge, the government insists they must be consistent with its existing policy that coalbed methane continues to be treated as natural gas for regulatory purposes.

So far about 800 coalbed methane wells have been drilled in Alberta and about 200 are producing 25 million cubic feet per day, led by MGV Energy at 15 million cubic feet per day.

EnCana, targeting 200 million cubic feet per day of coalbed methane production within five years, drilled about 200 wells last year and plans another 300 this year, while EOG Resources is aiming for 100 wells this year on a lease that it believes holds up to 200 billion cubic feet.

The Energy and Utilities Board issued 79 coalbed methane well permits in January, compared with just four a year ago and 577 for all of 2003.