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Shallow gas leases filed in Interior Alaska Alaska’s only coal producer, Usibelli Coal Mine, starts its coalbed methane exploration program, drilling planned next summer Patricia Jones Petroleum News Contributing Writer
Usibelli Coal Mine Inc., headquartered in central Alaska near Healy, has taken its first step in exploring coalbed methane development and production.
Earlier in May, Usibelli filed eight shallow gas leases on state land northeast and adjacent to the company’s coal mining leases. (See news brief in May 18 edition of Petroleum News.)
“We’ve got thickness of coal and the right kind of formation that is typically looked at for coalbed methane,” Steve Denton, Usibelli’s vice president of business development, told Petroleum News May 19. “We thought it was prudent to take a look at the possibility of methane production in the future … the first step in doing that is applying for leases.”
After working through permitting and leasing issues this summer and fall, Usibelli plans its first coalbed methane test wells in the summer of 2004, he said.
“It’s not a terribly aggressive program — basically the first thing we’ll drill some test wells to see if we’ve got anything,” he said. “The first test well pattern will probably be five wells. We really need to do some basic geology before we even know where the drilling should be.”
Consulting with Usibelli on its initial shallow gas program is the Casper, Wyo.-based Goolsby, Finley & Associates, a company Denton described as very active in coalbed methane work in the Powder River region. “The coal there is very similar to the coal we have here,” he added. Deep coal formations The eight shallow gas leases cover about 46,000 acres of land, he said, most located northeast of Usibelli’s existing mining claims that are about three miles northeast of the Parks Highway community of Healy. Two of the shallow gas leases are located adjacent to the Parks Highway, Denton said.
“There are a few sections that overlap our coal leases, but most (of the shallow gas leases) don’t have coal leases on it,” he said. “It’s not the area I would pick to mine coal next.”
That’s because the subsurface coal ranges from 200 feet to 2,000 feet deep on those shallow gas lease lands, he said. Usibelli, which currently produces about 850,000 tons of coal each year, uses open-pit mining to extract coal from near-surface deposits.
“We’re looking for coal to mine at 500 feet or less,” he said. “If you’re talking about surface mining and shallow gas development, the two don’t cross paths often.”
The underground coal formation on the shallow gas leases runs up to 120 feet thick, Denton said, and the company has identified five to six coal seams that have potential for coalbed methane production.
Yet the majority of that coal is not included in Usibelli’s 100 million tons of coal mining reserves, because of its depth, Denton said.
“If we were going to go underground, we might get into that,” he said. “That would be many decades, if not centuries away, because we have so much shallow coal.”
Future shallow gas uses In addition to the large seams of coal, other indications exist for the potential of coalbed methane, Denton said.
“Some of the wells around here have had a little bit of gas — the deeper water wells,” he said. “Nothing that we’ve seen approach marginal amounts for production of gas. … Water wells are nowhere deep enough (for coalbed methane production), and some of the deeper formations may have better potential.”
Usibelli hasn’t placed any kind of estimate on the potential amount of gas contained in shallow gas leases, he said.
“Gas quantities in coal can be such a wide range, until you’ve done some testing, it’s hard to put anything out there that wouldn’t be total fantasy,” Denton said. “It’s definitely in the formative stages for us. As time goes on, we’ll have a better picture of what the potential is. Really it is a shot in the dark right now — we know for sure we have a lot of coal in the ground.”
Should testing show economically producible gas resources, Usibelli could market it to existing gas distributors in Alaska, Denton said.
“If we do find a lot of gas, we can sell it for three to four times what we sell the coal for,” he said. “For us, even if it’s a fairly small amount of gas, it could be used for internal use. We consume quite a bit of electricity and heat.”
Recent changes in state regulations regarding shallow gas leasing have also contributed to Usibelli’s new effort. “It makes it a little bit more friendly to go after these smaller quantities of gas,” Denton said.
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