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Coal Bed Methane |
AIMR 2009 |
Coal Bed Methane
Coal Bed Methane (CBM) is a naturally occurring methane gas which is formed during the coalification process (when organic matter is converted into coal). The methane is usually mixed with carbon dioxide, other hydrocarbons and nitrogen. CBM also is referred to as Coal Seam Methane (CSM) and Coal Seam Gas (CSG). Methane that is produced or released as part of coal mining operations is called Coal Mine Methane (CMM).
CBM is similar to conventional natural gas and is used to power water heaters, stoves and space heaters for both domestic and business settings as well as to fuel industrial facilities and to generate electricity. Water is produced as a by-product of CBM production although any beneficial reuse of the water depends on a number of factors including its quality, cost of treatment required and pipeline infrastructure. Water of suitable quality can be used for town water, aquaculture, recharging aquifers, wetlands, recreational lakes or at mining operations and power stations. Poor quality water may be required to be contained in storage ponds.
Resources
As at December 2008 the proven and probable (2P) reserves of CBM in Australia were 16 179 Petajoules (PJ) a 116% increase over the 2007 2P reserves of 7 500 PJ. The life of the resource is more than 115 years at the current rate of extraction of 138.5 PJ. Queensland (Qld)has 15 302 PJ (or 94.6%) of the 2P reserves with the remaining 887 PJ in New South Wales (NSW). Note that there are no CMM reserves.
Exploration Expenditure
Data relating to exploration expenditure are not published by ABS on either a state or national basis. During 2007-08 CBM exploration in Qld continued at record levels with about 600 CBM wells drilled compared to 70 natural gas wells. Exploration in Qld continues to concentrate on the Bowen, Galilee and Surat Basins while in NSW exploration continues in the Sydney, Gunnedah, Gloucester and Clarence-Moreton Basins which all have 2P reserves. Other prospective basins include the Pedirka, Murray, Perth, Ipswich, Maryborough, and Otway.
Production
In Australia, production of CBM was zero in 1995 and 20 PJ in 2003. In 2008 CBM production has risen to 138.5 PJ which is a 26% increase on the 2007 production of 110 PJ. In 2008, Qld produced 133.2 PJ (or 96%) from the Bowen and Surat Basins. In NSW 5.3 PJ was produced from the Sydney Basin. Total conventional gas production in Qld during 2008 was 89.8 PJ. In other words CBM provided 60% of Qld gas needs during 2008. According to the independent industry commentator, Wood Mackenzie, CBM could provide up to 50% of the Australian east coast natural gas supply by 2020. Note that CMM is not counted in CBM production statistics.
Industry developments
Qld CBM and CMM developments include:
Energy Developments Ltd: In late 2008 the $60 million 40 Megawatt (MW) CMM power plant commenced operating at the Moranbah North Colliery.
Liquefied Natural Gas Ltd: In February 2008 the company announced that Norwegian group Golar LNG Ltd would take a 40% stake with an off-take agreement in a $1.5 billion 1.5 million tonnes per annum (Mtpa) Gladstone liquid natural gas (LNG) plant which is planned to begin operating in 2012. Arrow Energy has agreed to supply the required CBM to the LNG plant in Gladstone.
Arrow Energy: In June 2008 Shell agreed to take a 30% stake in Arrow Energy's CBM licences in Qld. Arrow Energy is planning to build an initial 1.5 Mtpa LNG plant at Fisherman's Landing near Gladstone with production starting in 2012. Royal Dutch Shell is investigating a site on Curtis Island near Gladstone for an LNG plant. In October 2008 Arrow Energy was given approval to develop the Stratheden production lease 20km north west of Dalby in the Surat basin. Arrow and ERM Power plan to jointly develop the $545 million 450 MW Braemar 2 power station 40km south west of Dalby. In late 2008 Arrow Energy and the Dalby Town Council initiated a $16 million program to upgrade a reverse osmosis plant at Dalby. After the upgrade Arrow Energy will supply up to 5 million litres of water a day for treatment which can then be made available to supplement town water.
Origin Energy: In September 2008 ConocoPhillips and Origin formed a joint venture to commercialise Origin's CBM reserves. The partners plan to develop four LNG plants at Gladstone with production from the first two 3.5 Mtpa plants expected in 2014. In late 2009 Origin is expecting to commission a $780 million 630 MW gas fired power station on the Darling Downs using CBM from Spring Gully.
Santos Ltd: In May 2008 the Malaysian Government owned Petronas bought a 40% stake in Santos's Gladstone LNG project. The partners plan to build a $5 to $7 billion LNG project at Gladstone with a capacity of 3 to 4 Mtpa commencing in 2014.
Queensland Gas Company: The company was taken over by the British owned BG Group in December 2008. Queensland Gas plans to build an $8 billion LNG plant in Gladstone with a capacity of 3 to 4 Mtpa commencing in 2013. The 135 MW CBM fired Condamine power station is due to be commissioned in 2009. The company currently has the capacity to produce about 17 megalitres of water a day and is negotiating an agreement with the Dalby Regional Council to supply half a billion litres a year to the town of Miles.
Sunshine Gas: The company was taken over by Queensland Gas Company in August 2008. Sunshine Gas and Sojitz Corporation had planned to build a A$570 million 500 000 tpa LNG plant at Gladstone using Lacerta CBM with first production in 2012.
Pure Energy Ltd: In February 2009 the company upgraded the Cameron Project 2P reserves from 394 to 522 PJ.
Bow Energy Ltd: In March 2009 the company announced 192 PJ of 3P reserves at the Don Juan Project in the Surat Basin.
Queensland Government: In July 2008 the Queensland Government announced a A$5 million grant for a feasibility study into the use of water produced from CBM extraction.
New South Wales CBM and CMM developments include:
Coal and Allied Ltd: In November 2008 the company announced a A$5 million trial to extract CBM prior to open-cut mining at the Mt Thorley Warkworth mine in the Hunter Valley.
Metgasco Ltd: The company plans to build the 30 MW gas fired Richmond Valley power station to be fuelled by CBM over 15 years. Metgasco also plans to provide CS Energy's Swanbank Power Station in Ipswich with 18 PJ/ annum of CBM via the Lions way pipeline.
Sydney Gas: In November 2008 Sydney Gas announced a A$30 million well drilling program at Camden. In December 2008 AGL made a takeover offer for Sydney Gas. AGL, the operator of the Camden gas project, received approval to construct and operate four wells at Spring Farm and sixteen at Menangle Park.
Eastern Star Gas: The company plans to construct a 32km pipeline from the Narrabri Coal Seam Gas Project to the existing Wilga Park power station which is planned to be expanded from 12 to 40 MW. Eastern Star Gas is considering constructing an LNG plant at Newcastle.
Macquarie Generation: The company is proposing to construct 75km of pipelines from local underground coal mines to supply methane gas as a supplementary fuel to the Liddell Power Station in the Hunter Valley.
