More investors are now inquiring about Coalbed Methane exploration firms. Just as uranium miners were flying well below the radar screen in early 2004, Coalbed methane exploration may become the new extraordinarily hot sector later and next. Traditionally, Coalbed methane gas endangered coal miners, resulting in alarming deaths early in the prior century. This is the destiny suffered today by many Chinese coal miners in the littler, private coal mines. Typically , the methane gas trapped in coal seams was flared out, before underground mining began, so as to stop those explosions. Rising natural gas costs have long since ended that practice.
Today, Coalbed methane firms are turning a centuries-long bother and byproduct into a good resource. About 9 percent of total US natural gas production comes from the natural gas found in coal seams. Because natural gas costs have increased, along with the bull markets found in uranium, oil, and valuable and base metals, Coalbed methane has become active. It is after all a natural gas. But because it is outside the field of the petroleum industry, Coalbed methane, or CBM as many industry insiders call it, is called the radical gas. It may be unconventional today, but as the industry keep growing by impressive jumps, on a world scale, CBM may shortly achieve some respect. Please remember that a few years gone, there had been very little cheerleading about nuclear energy. Today, positive news items are running way better than ten to one in favour of that power source.
CBM is the natural gas contained in coal. It consists basically of methane, the gas we use for home heating, gas-fired electrical generation, and commercial fuel. The power source within natural gas is methane (chemically, it is CH4), whether it comes from the oil industry or from coal beds.
CBM has a few strong points in its favor. The gases produced from CBM fields are often nearly 90 p.c methane. Which kind of gas has more impurities? No, it isn't the natural, or traditional, gas you thought it might be. Often, CBM gas has less impurities than the natural gas produced from typical wells. CBM exploration is done at a shallow level, between 250 and 1000 meters, than typical gas wells, which occasionally are drilled below 5,000 meters. CBM wells can last a long time some could produce for 40 years or longer.
Natural gas is made by the compression of underground organic material combined with the earth's raised temperatures thousands of meters below surface. Traditional gas fills the spaces between the penetrable reservoir rocks. The coalification process is similar but the result's different: both the Coalbed and the methane gas are trapped in the coal seams. Instead of filling the tiny spaces between the rocks, the coal gas is in the coal seams.
One of the past Problems associated with CBM exploration was the dependency on expensive horizontal drilling strategies to extract the methane gas from the coal seams. Advanced fracturing techniques and breakthrough horizontal drilling methods have increased CBM success proportions. As a result, an increasing number of exploration corporations are following the early bull market in CBM. Market capitalizations for plenty of these companies mirror similar early plays we mentioned during our mid 2004 uranium coverage (June thru October, 2004). Industry experts told us there would be a uranium bull market. Now, we are hearing the same forecasts about CBM.
Seven TIPS BY Dr. DAVID MARCHIONI
We asked Dr. David Marchioni to provide our subscribers with his 7 Tips that could help investors better understand what to look for, before making an investment in a CBM play. Dr. Marchioni helped co-author the CBM textbook, An Assessment of Coalbed Methane Exploration Projects in Canada, published by the Geological Survey of Canada. Also he is president of Petro-Logic Services in Calgary, whose clients have included the Canadian divisions of Apache, BP, BHP, Burlington, Devon, El Paso Energy, and Phillips Petrol, among others. He is also a director of Pacific Far East China Energy and is overseeing the organization's CBM exploration programme in China.
Our series of fone and e-mail interviews started while Dr. Marchioni sat on a drill rig in Alberta?s foothills, the Manville area, till he finished outlining his top 7 tips, or advices, on the way to think like a CBM professional.
. 1) COAL SEAM THICKNESS
Is there a fair thickness of coal? You must find out how thick the coal seams are. With thickness, you get the regional extent of the resource. For example, there must be an effective minimum thickness into which one can drill a horizontal well.
2) GAS CONTENT
Generally gas content is expressed as cubic feet of gas per ton of coal. Find how thick it is and how far it is spread. Then, you've got a measure of unit gas content. Between coal seam thickness and gas content, you can decide the size of the resource. You've got to look at both thickness and gas content. It's no use to have high gas content if you don't have much coal. The industry investigates resource per unit area. In other words, how much gas is in place per acre, hectare, or square mile? In the early stage of the CBM exploration, this truly all you've got to work with in judging its potential.
3) MATURITY LEVEL OF THE COAL
This is the measure of the stage the coal has reached between the mineral's inception as peat. Peat matures to become lignite. Later , it develops into bituminous coal, then semi-anthracite and eventually anthracite.
There is a progressive maturation of coal as a geological time continuum and the earth's temperature, relying on depth. By measuring certain parameters, you can define where it is in the chemical process. For example, the chemistry of lignite is not the same as that of anthracite. This phrasing is named coal rank in coal industry terminology.
4) PERMEABILITY
When you're beginning to contemplate CBM production, this and the subsequent item must be assessed. How permeable is the CBM property? You need permeability, or the gas can't flow. If the coal isn't permeable at all, you can not generate gas. The gas needs to be able to flow. If it is very permeable, then you can perhaps never pump enough water. The water just keeps getting replaced from the huge area surrounding the well bore. The water will actually continue coming, and you will never lower the pressure so the gas can be released.
5) WATER
In an exceedingly high percentage of CBM plays, the coal contains quite a lot of water. You've got to pump the water off so as to reduce the pressure in the coal bed. Gas is held in coal by pressure. The deeper you go, generally the more gas you get, because the pressure looks higher. The way to induce the gas to start flowing is to pump the water out of the coal and lower the water head of pressure. How much water are we going to supply? Are we going to need to get rid of it? If it is fresh, then there could be Problems with regulatory agencies. In Alberta, the govt has limitations on removing clean water because others might wish to use it. One could be using a sector that people use as water wells for farms and agricultural communities. Both water quality and water volume matter. For example, Manville water is very significant so nobody wants to put it into a river; this water is pushed back down into existing oil and gas wells in permeable zones (but which are also not connected to the coal).
6) FUNDING
To be in a position to access land and do some initial drilling, i.e. The 1st round of financing, it would cost a minimum of C$4 million. This would include some geological work and drilling at least 5 or 6 wells. In Horseshoe, that would cost around C$4 million (say 1st round of finance); in Manville, about C$9 million. This is under the assumption the company does not buy the land. The land in western Canada is very expensive and firmly held. A lot of the work is done as a farm in drilling on land held by another for a proportion of the play. (Editor's note: In a prior interview, Doctor. Marchioni commented about his preference for Pacific Pacific Rim China Energy's land position in China because comparable land in western Canada would have cost ?$100 million or even more. ?
7) INFRASTRUCTURE
The geology only tells you what's there, and what the prospects of success are. You then have to follow it. Can we sell it? Gas prices are local, meaning they vary from country to country, depending if it is locally produced and in what excess (or lack thereof). How much can we extract? How much is it going to cost us to get it out of the ground? Are there readily available services for this property? Do you have to chopper a rig onto the property at some incredible price just to drill it? Will you have to build a pipeline to transport the gas? Or, in China for example are there established convoys for trucking LNG across masses of kilometers?
One addition, which we have discussed in prior articles, and particularly in the Market Outlook Book, Quality of Management Pulls PR, it is vital that the CBM Company have experienced management. This. Would imply a managerial team that includes people who have gotten results, not simply a veteran exploration geologist but a team that can sell the tale and bring in the compulsory financing to move the project into production.
There are two main reasons why many of those Coalbed methane plays are being regarded seriously. First, the macroeconomic reason is that increasing power costs have driven firms in the energy fields to chase any industrial projects to help fill the energy gap. Coalbed methane has a more than twenty years of evidence in the United States. The excitement has spread to Canada, China and India, where CBM exploration starts to take off. 2nd, the elemental reason is that exploration work has been done already in delineating coal deposits. There are, perhaps, 800 coal basins internationally, with less than 50 CBM manufacturing basins. Put simply, there is the potential for expansion in this sector.
Today, Coalbed methane firms are turning a centuries-long bother and byproduct into a good resource. About 9 percent of total US natural gas production comes from the natural gas found in coal seams. Because natural gas costs have increased, along with the bull markets found in uranium, oil, and valuable and base metals, Coalbed methane has become active. It is after all a natural gas. But because it is outside the field of the petroleum industry, Coalbed methane, or CBM as many industry insiders call it, is called the radical gas. It may be unconventional today, but as the industry keep growing by impressive jumps, on a world scale, CBM may shortly achieve some respect. Please remember that a few years gone, there had been very little cheerleading about nuclear energy. Today, positive news items are running way better than ten to one in favour of that power source.
CBM is the natural gas contained in coal. It consists basically of methane, the gas we use for home heating, gas-fired electrical generation, and commercial fuel. The power source within natural gas is methane (chemically, it is CH4), whether it comes from the oil industry or from coal beds.
CBM has a few strong points in its favor. The gases produced from CBM fields are often nearly 90 p.c methane. Which kind of gas has more impurities? No, it isn't the natural, or traditional, gas you thought it might be. Often, CBM gas has less impurities than the natural gas produced from typical wells. CBM exploration is done at a shallow level, between 250 and 1000 meters, than typical gas wells, which occasionally are drilled below 5,000 meters. CBM wells can last a long time some could produce for 40 years or longer.
Natural gas is made by the compression of underground organic material combined with the earth's raised temperatures thousands of meters below surface. Traditional gas fills the spaces between the penetrable reservoir rocks. The coalification process is similar but the result's different: both the Coalbed and the methane gas are trapped in the coal seams. Instead of filling the tiny spaces between the rocks, the coal gas is in the coal seams.
One of the past Problems associated with CBM exploration was the dependency on expensive horizontal drilling strategies to extract the methane gas from the coal seams. Advanced fracturing techniques and breakthrough horizontal drilling methods have increased CBM success proportions. As a result, an increasing number of exploration corporations are following the early bull market in CBM. Market capitalizations for plenty of these companies mirror similar early plays we mentioned during our mid 2004 uranium coverage (June thru October, 2004). Industry experts told us there would be a uranium bull market. Now, we are hearing the same forecasts about CBM.
Seven TIPS BY Dr. DAVID MARCHIONI
We asked Dr. David Marchioni to provide our subscribers with his 7 Tips that could help investors better understand what to look for, before making an investment in a CBM play. Dr. Marchioni helped co-author the CBM textbook, An Assessment of Coalbed Methane Exploration Projects in Canada, published by the Geological Survey of Canada. Also he is president of Petro-Logic Services in Calgary, whose clients have included the Canadian divisions of Apache, BP, BHP, Burlington, Devon, El Paso Energy, and Phillips Petrol, among others. He is also a director of Pacific Far East China Energy and is overseeing the organization's CBM exploration programme in China.
Our series of fone and e-mail interviews started while Dr. Marchioni sat on a drill rig in Alberta?s foothills, the Manville area, till he finished outlining his top 7 tips, or advices, on the way to think like a CBM professional.
. 1) COAL SEAM THICKNESS
Is there a fair thickness of coal? You must find out how thick the coal seams are. With thickness, you get the regional extent of the resource. For example, there must be an effective minimum thickness into which one can drill a horizontal well.
2) GAS CONTENT
Generally gas content is expressed as cubic feet of gas per ton of coal. Find how thick it is and how far it is spread. Then, you've got a measure of unit gas content. Between coal seam thickness and gas content, you can decide the size of the resource. You've got to look at both thickness and gas content. It's no use to have high gas content if you don't have much coal. The industry investigates resource per unit area. In other words, how much gas is in place per acre, hectare, or square mile? In the early stage of the CBM exploration, this truly all you've got to work with in judging its potential.
3) MATURITY LEVEL OF THE COAL
This is the measure of the stage the coal has reached between the mineral's inception as peat. Peat matures to become lignite. Later , it develops into bituminous coal, then semi-anthracite and eventually anthracite.
There is a progressive maturation of coal as a geological time continuum and the earth's temperature, relying on depth. By measuring certain parameters, you can define where it is in the chemical process. For example, the chemistry of lignite is not the same as that of anthracite. This phrasing is named coal rank in coal industry terminology.
4) PERMEABILITY
When you're beginning to contemplate CBM production, this and the subsequent item must be assessed. How permeable is the CBM property? You need permeability, or the gas can't flow. If the coal isn't permeable at all, you can not generate gas. The gas needs to be able to flow. If it is very permeable, then you can perhaps never pump enough water. The water just keeps getting replaced from the huge area surrounding the well bore. The water will actually continue coming, and you will never lower the pressure so the gas can be released.
5) WATER
In an exceedingly high percentage of CBM plays, the coal contains quite a lot of water. You've got to pump the water off so as to reduce the pressure in the coal bed. Gas is held in coal by pressure. The deeper you go, generally the more gas you get, because the pressure looks higher. The way to induce the gas to start flowing is to pump the water out of the coal and lower the water head of pressure. How much water are we going to supply? Are we going to need to get rid of it? If it is fresh, then there could be Problems with regulatory agencies. In Alberta, the govt has limitations on removing clean water because others might wish to use it. One could be using a sector that people use as water wells for farms and agricultural communities. Both water quality and water volume matter. For example, Manville water is very significant so nobody wants to put it into a river; this water is pushed back down into existing oil and gas wells in permeable zones (but which are also not connected to the coal).
6) FUNDING
To be in a position to access land and do some initial drilling, i.e. The 1st round of financing, it would cost a minimum of C$4 million. This would include some geological work and drilling at least 5 or 6 wells. In Horseshoe, that would cost around C$4 million (say 1st round of finance); in Manville, about C$9 million. This is under the assumption the company does not buy the land. The land in western Canada is very expensive and firmly held. A lot of the work is done as a farm in drilling on land held by another for a proportion of the play. (Editor's note: In a prior interview, Doctor. Marchioni commented about his preference for Pacific Pacific Rim China Energy's land position in China because comparable land in western Canada would have cost ?$100 million or even more. ?
7) INFRASTRUCTURE
The geology only tells you what's there, and what the prospects of success are. You then have to follow it. Can we sell it? Gas prices are local, meaning they vary from country to country, depending if it is locally produced and in what excess (or lack thereof). How much can we extract? How much is it going to cost us to get it out of the ground? Are there readily available services for this property? Do you have to chopper a rig onto the property at some incredible price just to drill it? Will you have to build a pipeline to transport the gas? Or, in China for example are there established convoys for trucking LNG across masses of kilometers?
One addition, which we have discussed in prior articles, and particularly in the Market Outlook Book, Quality of Management Pulls PR, it is vital that the CBM Company have experienced management. This. Would imply a managerial team that includes people who have gotten results, not simply a veteran exploration geologist but a team that can sell the tale and bring in the compulsory financing to move the project into production.
There are two main reasons why many of those Coalbed methane plays are being regarded seriously. First, the macroeconomic reason is that increasing power costs have driven firms in the energy fields to chase any industrial projects to help fill the energy gap. Coalbed methane has a more than twenty years of evidence in the United States. The excitement has spread to Canada, China and India, where CBM exploration starts to take off. 2nd, the elemental reason is that exploration work has been done already in delineating coal deposits. There are, perhaps, 800 coal basins internationally, with less than 50 CBM manufacturing basins. Put simply, there is the potential for expansion in this sector.
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