KANSAS COALBED METHANE COMES ON STREAM

William T. Stoeckinger
Consultant
Independence, Kan.

Inexpensive drilling and development costs are contributing to a resurgence in coalbed methane gas production in southeastern Kansas.

The Sycamore Valley, 6 miles north of Independence, is witnessing the most successful coalbed methane development in the state (Fig. 1). The primary drilling objective is the Weir coal at a depth of 940 ft.

Wells are capable of producing 100 Mcfd of gas.

Further east, in Labette and Neosho Counties, the Riverton coal is producing commercially. To the southwest, the Mulky coal is being rediscovered in Chautauqua County.

During the early 1900s, southeastern Kansas was the largest gas producer in the U.S. By 1920, conventional gas was gone, at which time operators turned to "shale gas," now recognized as the Mulky coal seam. Shale gas remained a major gas source until the 1930 depression. Quite remarkably, shale gas wells again produce today.

ECONOMICS

Exploration risks and well costs are low. This is true because southeast Kansas is a mature oil and gas province.

As such, abundant well control is available to pinpoint the better coal pockets, and service companies exist in every town.

Any drillsite will be within 30 min of a supply house or trained oil field worker.

GAS PRICES

Local and interstate gas markets are seeking supply. Gas prices vary from $1.10-1.95/Mcf at the wellhead through a multitude of low pressure (30 psig) gas gathering systems. Little gas is sold at spot simply because local end-user prices are better.

LEASE COSTS

Leases are fee with one-eighth royalty. Lease sizes of 160 acres are common for $5/acre near the larger towns, whereas larger parcels of 2,000 acres are acquired for about $3/acre in outlying cattle grazing country.

Minerals are not severed. Rights to the coal gas is specified in new leases for the sake of clarity.

WELL COSTS

Compared with other parts of the U.S., major savings are possible in eastern Kansas.

For drilling and site location (hole depth to 1,500 ft) one contractor quotes a turn-keyed 6 1/2-in. hole for $3.25/ft using a downhole Mission hammer with a Schramm air-rotary, truck-mounted rig and an 850 cfm air compressor. Extra are 2 1/2-in. cores for $600 each, pits for $100, 25 ft of 7-in. surface casing (the legal state requirement) set to surface for $150.

There is no fee for mobilization. Access is free along well maintained section roads.

One logging and perforating company quotes the following package: Three cased-hole logs-gamma ray-neutron, collar locator, and cement bond, plus 10 perforations-for $1,100. Perforations over 10 are billed at $10/shot. All logs have a 5% cash discount.

As a rule, Kansas coals are very permeable, therefore, the most cost effective method for hydraulic stimulations is proving to be the simplest.

One technique involves washing the perforated internal with 4 bbl of 15% hydrochloric (HCI) acid, mixed with 16 bbl of potassium chloride (KCI) and 15,000 scf of nitrogen. Cost is $1,100 with a 10% discount for cash.

By using a J-type packer on 2 3/8-in. tubing, two zones can be treated at one-third the price.

Crosslink gel, sand fracs costing $6,600 each, have the following characteristics: 18,000 gal of gel in a 40-lb system carrying 30,000 lb of 10:20 sand at concentrations up to 5 ppg. Commonly employed are seven trucks: three water transports, two pumps, one sand, and one recording.

Abandoned oil leases supply a wealth of used oil field equipment. A veteran supplier can halve the cost of new wellhead equipment, most tubulars, tanks, gas separators, gas meter loops, and mounted pump jacks capable of moving 300 bw/d using 2 1/2-in. downhole conventional pumps.

Because of the mentioned savings, initial pilot wells to 1,200 ft might cost $30,000 to drill and test one coal seam complete with 4 1/2-in. casing. Development wells should not exceed $20/ft.

The need to dispose of salt water will vary on a lease-by-lease basis. Some wells make very little water, which is hauled off for $0.90/bbl. Others require disposal wells, completed at 1,500 ft in the cavernous dolomites of the Arbuckle formation. These wells cost about $17,000.

Assuming $1.70/Mcf, a 40 Mcfd well should pay out in 2 years without the tax credit.

TAX CREDIT

Section 29 (1984) of the IRS code contains particulars on the credits associated with nonconventional, coalbed-methane gas production and sales. Although the credit has been on the books for years, it has been overlooked by both owners and operators.

To qualify for the credit, a well bore must have been drilled between the years 1981 and the end of 1990. That is, new wells must be drilled before the end of this year. Wells drilled after 1981 already qualify if they have coal behind pipe.

As soon as the production is classified by state agencies and approved by FERC, the credit is taken dollar for dollar off the tax return, but cannot reduce a taxpayer's obligation below his Alternate Minimum Tax.

Currently, the credit is $0.90 per Mcf sold. It continues to increase at about 5% per annum until being phased out in the year 2001. Other notable aspects of this credit are that it is freely transferable without recapture provisions, and active as well as passive credits are created.

GEOLOGY

High-volatile A and B coals of the Cherokee Group of Pennsylvanian age are the main targets (Fig. 2). These crop out in easternmost Kansas where the coals have a thickness of a few inches to several feet.

The coals dip gently westward, and are buried 500-900 ft below the surface in central Montgomery County. Gas content is about 200 cu ft/ton, making them one of the most gaseous in the United States at similar depth and rank.

Regional distribution maps prepared by the Kansas Geological Survey show hundreds of square miles where at least one coal seam is 4 ft thick or thicker. One 4 ft thick coal seam contains in-place gas of about 1 bcf/sq mile.

STRUCTURE

Conventional gas is restricted to anticlines. Charles (see bibliography) observed in 1929 that the better "shale gas" wells were found at higher structural positions where the effects of jointing were more evident. Differential compaction of thick shales underlying coal beds influences the orientation and degree of jointing in coal seams and helps explain why synclinal flanks, as opposed to anticlinal crests, are the most rewarding sites for modern exploration efforts.

RESERVOIR CHARACTERISTICS

Gas desorption in sealed canisters is the most cost effective way to estimate a coal's gas content. The amount of "lost gas," however, can be seriously underestimated by factors which may be as high as 400% if the drilling technique is inappropriate.

Lost gas is that gas which nearly explodes from a coal when it is cut, brought to the surface, and released from its confining pressure.

There is only one documented eastern Kansas coal with less than 75 cu ft/ton (Table 1). It had no "lost gas" component.

The gassier coals give up 50% of their gas within the first 6 days. Less gassy coals are easily recognized by the shape of their desorption curve (Fig. 3).

Drainage radius is the critical parameter in commercial development of coal seam gas. Radius of drainage is a function of a coal's fracture permeability. The permeability of coals in southeastern Kansas is high as indicated by phenomena such as excellent flow of both water and gas when a coal is drilled using air, mud cake build up in front of coal seams, and the low resistivities measured by the induction log. Recent quantitative slug test measurement of a Weir coal confirms permeabilities above 200 md.

Cumulative production from the only coal gas well with 4 years of history confirms observations made in the Black Warrior basin of Alabama that drainage radius is commonly over 3,000 ft from the well bore. The shape of the drainage envelope is elliptical, with the long axis paralleling the coal's cleat face.

KANSAS DEVELOPMENT

Nonconventional coal gas production was in vogue during the early part of the century. But it was not until 1985 that this old resource was rediscovered.

PRE-1930

By 1930, conventional gas reservoirs were depleted. As a consequence, operators turned to "shale gas" (Mulky coal). Thicker coals, such as the Weir, were gassy but produced too much water and were plugged. Nonflowing wells, or those producing more than 5 bw/d, were uneconomical. These strict criteria preserved for the modern-day explorationist the task of producing gas from the many thick coals scattered throughout southeastern Kansas.

Pertinent conclusions reached in 1930 after successfully creating a new "shale gas" industry were:

Wells produced better because the "shale" was coalier, fractured, and on structural anomalies.
Wells in areas as large as several hundred square miles had the same general characteristics, indicating a blanket-type deposit was being developed, as would be expected in a coal seam.
Water must be given up to yield a certain amount of gas. Holding back pressure decreases the water influx. This latter point is quite obvious in recently introduced pilot programs.
Wells lasted 8-10 years. Initial flow for the better wells was 100 Mcfd. Exceptional, cumulative gas production for individual wells in the Chanute area was 200 MMcf.
Well spacing of 80 acres was best for economical as well as drainage reasons.

These conclusions are similar to those reached today in coalbed-methane research projects carried out by the Gas Research Institute. What is even more remarkable, is that commercial results were realized from the Mulky coal seam which is never more than 2 ft thick.

RECENT ATTEMPTS

The Mulky coal seam continues to give gas shows when drilled. Initial flows in the 40 Mcfd range are common. Wells with higher production exist west of Independence in Chautauqua County, where the first 107 NGPA classification for the Mulky coal was filed in April 1990.

In the Sycamore Valley, 6 miles north of Independence, a Weir coal gas well was brought in flowing 250 Mcfd and 80 bw/d in July 1985. This was after a lapse of 50 years. As of December 1989, this one well had cumulative production of 174 MMcf. Daily sales during 1989 were 110 Mcfd, down from 190 Mcfd reported for 1988.

The coal at 932 ft, is 4.5 ft thick and contains gas of 220 cu ft/ton. The coal has a bulk density of 1.65, a fracture gradient of 0.9 psi/ft, and flows naturally through 2-in. tubing with 110 psig on the 4-in. annulus.

The completion technique utilized four shots/ft and 1 bbl of HCI acid carried by 70:30 nitrogen foam. Four offset wells are noncommercial due to mechanical problems induced by inadequate completion procedures. After losing 4 years of available tax credits, the operator filed for a 107 NGPA classification in February 1990.

In August 1989, Stroud Oil Properties of Wichita introduced the first state-of-the-art, four-well, coal gas development site on the Miller leases, 2.5 miles west of the town of Sycamore.

During the dewatering phase, pumps moved 120 bw/d. Gas began to flow within 4 weeks at the rate of 18 Mcfd. After 4 months, the discovery well flowed naturally 70 bw/d and 75 Mcfd through 2 3/8-in. tubing with 150 psig on the annulus. Sales line pressure is 40 psig.

Water is handled on a vacuum with a state-approved water disposal system costing $17,000 and completed in 2 days in the Arbuckle limes at the depth of 1,500 ft. As dewatering proceeds, gas flows continue to increase. These efforts represent the first sale of NGPA 107 (coal gas) in the state of Kansas.

UNUSUAL CHARACTERISTICS

Kansas coals are different from other coals in the U.S. in several important aspects:

Coals begin to desorb their gas at pressures slightly below normal hydrostatic conditions.
The static fluid level for the Weir coal in the Miller area is 374 ft from the surface. This level reflects the remaining gas content in the coal.
A coal's permeability can be qualitatively determined by on site tests during drilling. Permeabilities over 200 md are known on the Miller leases.
The coals contain small amounts of black, low-gravity oil. Gas components vary greatly. Nitrogen and CO2 are minor constituents. Pipeline quality gas over 970 BTU is normal.
Some coal lacks gas in the vicinity of old, long-abandoned gas fields. The logical explanation is that the coals are in juxtaposition with a depleted sandstone reservoir. This phenomena can be recognized by the shape of the desorption curve or by static fluid levels.
Water in coal, as well as other porosity, is salty, usually above 90,00 ppm salt.

BIBLIOGRAPHY

Brady, Lawrence L., "Deep coal resource in the Cherokee Group (Middle Pennsylvanian) in eastern Kansas, abs.," AAPG Bulletin, vol. 73/3, p. 89, pp. 336-337.

Charles, Homer H., and Page, James H., "Shale-gas industry of eastern Kansas," AAPG Bulletin, vol. 13, part 1, 1929, pp. 367-381.

Diamond, W. P., et al, "Measuring the extent of coalbed gas drainage after 10 years of production at Oak Grove pattern, Alabama," paper 8961, 1989 Coalbed Methane Symposium, Tuscaloosa, Alabama.

Stoeckinger, W.T., "Methane from coal in southeastern Kansas, the rebirth of an old industry," paper 8964, 1989 Coalbed Methane Symposium, Tuscaloosa, Alabama, pp. 212-217.