Coal Bed Methane Fact Sheet

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Introduction

Coal Bed Methane (CBM) is naturally occurring methane gas (CH4) in coal seams. It is referred to also as Coal Seam Methane (CSM) and Coal Seam Gas (CSG). Methane which is associated with coal mining operations is called Coal Mine Methane (CMM). Methane was long considered a major problem in underground coal mining but now CBM is recognised as a valuable resource. The methane is usually mixed with carbon dioxide, other hydrocarbons and nitrogen.

CBM forms by either biological or thermal processes. During the earliest stage of coalification (the process that turns plants into coal) biogenic methane is generated as a by-product of microbial action (similar to the mechanism which generates methane in council landfills). Biogenic methane is generally found in near-surface low rank coals such as lignite. Thermogenic methane is generally found in deeper higher-rank coals. When temperatures exceed about 50°C due to burial, thermogenic processes begin to generate additional methane, carbon dioxide, nitrogen and water. The maximum generation of methane in bituminous coals occurs at around 150°C.

The methane produced is adsorbed onto micropore surfaces and stored in cleats, fractures and other openings in the coals. It can occur also in groundwaters within the coal beds. CBM is held in place by water pressure and does not require a sealed trap as do conventional gas accumulations. The coal acts as a source and reservoir for the methane gas while the water is the seal.

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Extraction Technology

CBM is produced by drilling a well into a coal seam, hydraulic fracturing the coal seam then releasing the gas by reducing the water pressure by pumping away the water. Hydraulic fracturing of the coal seam is done by pumping large volumes of water and sand at high pressure down the well into the coal seam which causes it to fracture for distances of up to 400m from the well. The sand carried in the water is deposited in the fractures to prevent them closing when pumping pressure ceases. The gas then moves through the sand-filled fractures to the well.

A commercial operation needs the right combination of coal thickness, gas content, permeability, drilling costs (number of wells, seam depth and coal type), the amount of dewatering required to allow gas flow and proximity to infrastructure.

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Administration (Legislation)

In Australia the CMM and CBM resources are administered by State and Territory Governments. In New South Wales and Queensland CMM is administered by mineral resources legislation and CBM is administered by petroleum resources legislation. In Victoria, CBM resources are administered under the legislation for mineral resources development.

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History

Although the presence of methane has been known ever since coal mining began, separate commercial production of CBM is a relatively recent step. This commenced in the USA in the 1970's, and exploration for CBM in Australia began in 1976 in Queensland's Bowen Basin when Houston Oil and Minerals of Australia Incorporated drilled two unsuccessful wells. In February 1996 the first commercial CMM operation commenced at the Moura mine in Queensland methane drainage project (then owned by BHP Mitsui Coal Pty Ltd). In the same year at the Appin and Tower underground mines (then owned by BHP Pty Ltd) a CMM operation was used to fuel on-site generator sets (gas fired power stations). The first stand alone commercial production of CBM in Australia commenced in December 1996 at the Dawson Valley project (then owned by Conoco), adjoining the Moura coal mine.

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Exploration

CBM exploration involves locating highly productive areas, known as 'sweet spots' or 'fairways'. Initially, CBM was mainly sought within the Permian coal seams of the Bowen and Sydney Basins. However, since the early 2000's, CBM exploration also targeted the relatively shallow depths of the lower rank coal seams of the Jurassic age Surat and Clarence-Moreton Basins in Queensland. Although these seams have less gas content than high rank Permian age coal these lower rank coals at shallow depths (100 to 600m) are more permeable and CBM can be more easily desorbed (or extracted), resulting in higher recovery factors. Brown coal (or lignite) of Tertiary age also has become a target for CBM exploration in the Otway Basin in Victoria. Other prospective coal basins which have been targeted by CBM explorers include the Gunnedah, Gloucester, Galilee, Murray and Perth Basins. However, the Bowen Basin remains the most actively explored and developed basin in Australia for CBM. The basin's share of CBM drilling activity exceeded 80% of Australia's total in 2004.

Companies actively exploring for CBM include:

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Resources

As at September 2005 the 2P reserves (proven plus probable) of CBM in Australia were 3 477 Petajoules (PJ) or more than 50 years of production life at current rates of extraction of 64 PJ per annum. Queensland has 3 410 PJ (or 98%) of the 2P reserves with the remainder (67 PJ) at the Camden operation in New South Wales. Of the Australian reserves 2 733 PJ (or 79%) occur in the Bowen Basin and 677 PJ (or 19%) occur in the Surat Basin. The Santos Ltd operated Fairview project in the Bowen Basin has 1 098 PJ of 2P reserves or 32% of Australia's CBM reserves. Note that there are no CMM reserves.

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Production

In Australia the commercial production of CBM (including CMM) was zero in 1995. In 2003, CBM production was 40 PJ and by 2006 CBM production had doubled to 80 PJ with 73 PJ being produced in Queensland. In 2006, CBM met 63% of the total Queensland gas demand of 117 PJ. In 2006, CBM supplied about 15% of the east coast gas market. CBM is predicted to supply 35 to 50% of the gas demand in eastern Australia by 2020, as the Cooper Basin gas reserves become depleted. In 2004, CBM accounted for about 4% of Australia's total natural gas consumption. Operations producing CBM and CMM include:

Moura (now Dawson): The open-cut mine is owned by Anglo Coal Australia Pty Ltd and is located in the Bowen Basin. The commercial production of CMM commenced in February 1996 with gas being transported via a 21km pipeline to the Wallumbilla-Gladstone pipeline. The CMM is drained using a series of horizontal wells into both highwall and underground seams. Moura produces about 5.5 PJ/annum.

Dawson Valley: The CBM operation, now owned by Anglo Coal Australia Pty Ltd, commenced in November 1996 and is located in the Bowen Basin near the Moura mine. The project is connected by a 47km pipeline to the Wallumbilla-Gladstone pipeline. Dawson Valley produces about 3.0 PJ/annum.

Fairview: The CBM operation, owned by Santos Ltd (~75%), commenced in 1998 and is located in the Bowen Basin 100km north of Roma. The project is connected by a 26km pipeline to the Wallumbilla-Gladstone pipeline. Fairview produces about 13.9 PJ/annum.

Spring Gully: The CBM operation, owned by Origin Energy, commenced in June 2005 and is located near the Fairview project in the Bowen Basin. A 2x500 MW combined cycle gas fired power station is planned to be commissioned in 2009 with each unit consuming 35 PJ/annum.

Peat: The CBM operation, owned by Origin Energy, commenced in 2000 and is located 14km east of Wandoan. Peat produces about 6.0 PJ/annum.

Scotia: The CBM operation, owned by Santos Ltd, commenced in 2002 and is located about 25km north of Peat.Scotia produces about 8.0 PJ/annum.

Mungi: The CBM operation, operated by Origin Energy, commenced in 2004 and is located in the Bowen Basin near Moura. Mungi produces about 1.0 PJ/annum.

Moranbah: The CBM operation, owned by CH4 Gas/Arrow Energy, commenced in 2004 and is located near the township of Moranbah in the Bowen Basin. The project is connected to the 220 MW combined cycle gas fired power station near Townsville via a 391km pipeline. Moranbah produces about 14 PJ/annum.

Berwyndale South: The CBM operation, owned by Queensland Gas Company, commenced in 2006 and is located 20km east of Condamine in the Surat Basin. A 135 MW combined cycled gas fired power station is planned to be commissioned in 2009. Berwyndale South produces about 8 PJ/annum.

Kogan North: The CBM operation, owned by Arrow Energy/CH4 Gas, commenced in 2006 and is located 40km west of Dalby in the Surat Basin. Kogan North produces about 4 PJ/annum.

Daandine: The CBM operation, owned by Arrow Energy/CH4 Gas, commenced supplying about 2 PJ/annum to a 27 MW gas fired power station in 2006. The project is located 30km west of Dalby in the Surat Basin.

Tipton West: The CBM operation, owned by Arrow Energy/CH4 Gas, commenced supplying about 6 PJ/annum in February 2007 to the Braemer Power Station. The project is located 20km south of Dalby in the Surat Basin.

German Creek: The CMM operation fuels a 32 MW gas turbine, operated by Energy Developments Ltd. The 2.5 PJ/annum project commenced in 2006 at the German Creek Colliery located in the Bowen Basin 25km south west of Middlemount.

Oaky Creek: The CMM operation fuels a 13 MW gas turbine, operated by Envirogen. The project commenced in 2006 at the Oaky Creek Colliery located in the Bowen Basin 17km east of Tieri.

Camden: The CBM operation, owned by Sydney Gas, commenced in 2001 and is located 50km south west of Sydney in the Sydney Basin. Camden produces about 3.5 PJ/annum.

Appin and Westcliff (Tower): The CMM operation, operated by Energy Developments Ltd, fuels power stations with a total capacity of 97MW. The project commenced in 1996 at the Appin and Tower Collieries located 40km north west of Wollongong in the Sydney Basin. Appin and Westcliff produce about 7.5 PJ/annum.

Tahmoor: The CMM operation fuels a 5 MW gas turbine, operated by Envirogen. The project commenced in 2001 at the Tahmoor Colliery located in the Sydney Basin 70km south west of Sydney.

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Uses

CBM and CMM are generally used as either a fed for pipeline gas or as a fuel for on-site electric power generation. Pipeline gas is supplied to regional centres and cities for such uses as power generation, industrial facilities and mains gas for home heating, cooking and hot water. Water is produced as a by-product of CBM production and after treatment this water may be suitable for use as town water supply, industrial facilities (eg coal mines and abattoirs), feedlots and high-value horticultural development. Other untreated CBM water use options include aquaculture, recharging aquifers, habitat creation (eg wetlands) and recreation (eg sailing, boating, picnic spots).

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