Coalbed methane (CBM) is barely on the radar screen in Canada compared with conventional gas. But it is a new gas frontier with huge potential, which is attracting increasing industry attention.
More active companies now involved in CBM pilot projects, exploration, and development include EnCana Corp., MGV Energy Inc., Husky Energy Inc., Canadian Natural Resources Ltd., Apache Canada Ltd., and Trident Exploration. Most activity is centered in the dry coal Horseshoe Canyon play on the Alberta Plains. There is some CBM activity in British Columbia and in Nova Scotia on the East Coast.
EnCana, one of the largest operators, has drilled about 180 wells in a 370-well program this year on the Palliser Block east of Calgary. It has current production of 11 MMcfd and expects 30 MMcfd by yearend.
Because of proprietary factors and because companies are not required to declare a CBM well as such, estimates vary on how many CBM wells have been drilled.
David Hughes of the Geological Survey of Canada (GSC) said there are various estimates of the CBM in-place resource, but the Canadian Gas Potential Committee put it in at 187-568 tcf. The only place in Canada that has been assigned a medium reliability factor in estimates is the Alberta plains.
The GSC scientist said there have been many oil and gas penetrations in the area, and volumes of coal can be calculated with a high degree of accuracy compared, for example, with the Rockies Foothills region.
Thousands of wells
Hughes estimates a total of 1,500 CBM wells have been drilled, with production coming from 700. But, he said, various agencies are compiling their own lists. He said since CBM projects do not have to be declared as such it is necessary to surmise from target and completion depths what is CBM and what is not. He estimates total current CBM production to be about 70 MMcfd, mostly from the Horseshoe play. There also are other CBM formations—some of them wet coal.
Michael Gatens, CEO of MVG Energy Inc., estimates that some 1,000 CBM wells were drilled by yearend 2003 and another 1,400 will be drilled this year, including some recompletions.
MVG is drilling about 350 gross (280 net) wells this year for CBM targets or others that are commingled. MVG projects include a joint venture with ConocoPhillips.
Gatens said several years of slow, deliberate research by the industry are now leading towards the development phase. Driving activity is the knowledge gained plus improved shallow gas techniques and higher gas prices.
The MVG CEO said the challenge to the industry now is how much CBM can be recovered economically. He said the jury is still out on whether some gas-bearing coals in western Canada will be economical.
Gatens said it is relatively inexpensive to operate in the plains, but costs will be higher for drilling in the mountains or treed areas, which will require greater environmental protection efforts.