Coalbed Methane Makes A Comeback

Coalbed Methane (CBM) gas is a noteworthy source of energy which is rebounding after unfavorable financial and political conditions caused a downturn in production. Aka coal seam gas, CBM is a type of natural gas extracted from coalbeds and seams. Contrary to generating electricity from coal (extracted from coal mines), CBM, as well as conventional natural gas, has less than half of the greenhouse gas effect as that of coal. This is significant in that utilizing both CBM and natural gas reduces our carbon footprint by 50% compared to relying on coal as a fuel source.

How we got here…

In the late 1970s, the US Federal Government discouraged drilling for natural gas by manipulating gas prices to beneath market levels. However, in contrast to conventional natural gas production, research into coalbed methane as an energy resource was funded by the US Department of Energy since it was considered unconventional oil and gas drilling. CBM was exempt from price controls and production was promoted through tax credits.

In the late 1980s, CBM commercial production took off in northern New Mexico and southern Colorado. Producers scrambled to cash in on tax credits ending in 1992. Then in 1993, the President’s Climate Change Action Plan encouraged coalmine operators to officially recover CBM for energy use. In 2007 natural gas prices plummeted, making it unfeasible to continue operating the thousands of CBM wells that were subsequently abandoned in 2008.

Fast forward to today…

However, the recent turn of events highlights the unmistakable increasing demand for natural gas. Along with the encouraging financial return on CBM production, some companies like United Energy are acquiring these abandoned wells at bargain prices – wells that are still capable of producing methane gas as a profitable energy source. The quest to become less dependent on foreign energy supplies, and the higher price tag that often comes with it, has now taken center stage.

With holdings in the Cherokee Platform – an area of approximately 26,500 square miles in southeastern Kansas, southwestern Missouri, and northeastern Oklahoma – United Energy’s interest and intent is substantial. There are more than 200,000 coalbed methane gas producing wells in the area. Acquiring natural gas leases, wells, and pipelines ensures that United Energy has a sustainable revenue model from which to build significant shareholder value.

A quick primer on coalbed methane

As vegetable matter is converted into coal by natural processes (called coalification), methane-rich gas is created and stored internally in the coal. Up to seven times more methane can be stored in coal than an equal rock volume in conventional natural gas reservoirs. In addition, the methane is considered purer…in other words, having a higher concentration of methane than in gas from conventional sources.  As an added bonus, methane from coal is closer to the surface (sometimes hundreds versus thousands of feet) reducing the costs and challenges of extraction. Relatively low exploration overhead, coupled with ease of access to CBM, makes for an attractive energy source.

With an estimated 700 trillion cubic feet (TCF) in the continental US, CBM is abundant. Just one seventh of that amount is enough for a five-year supply at the current usage rate. As it is now, coalbed methane represents almost 7.5% of US natural gas production. The potential for increased recoverability of CBM as a national energy resource is promising.

The Process

Natural gas in the form of methane is found in the seams of coalbeds. Methane covers the pores of coal, or the matrix, by a process known as adsorption (similar to mist adhering to a window.) Rather than being absorbed like salt dissolving into water, water pressure causes methane to be adsorbed, or bonded, to the outside surfaces of coal particles like a glaze. The gas can also exist in open fractures (called joints or cleats) in free form. Methane is stored within the coal beds in an almost liquid state. The more porous, or permeable, coalbed seams are, the greater the storage capacity of CBM, and the greater the flow of gas.

Layers of oil, water, and methane gas are found within coal seams. CBM production employs a water well mechanism rather than that of an oil well (which also positively affects lower production costs.) The pressure from the water permeating coal deposits keeps the methane in place. By removing the layer of water, pressure is released and allows the methane to be freed from coal particles with unrestricted movement.

Production (mining) involves drilling a steel encased hole into the coal seam to extract the methane and draw off the water. This is accomplished with the help of a pump jack above ground, or a submersible sump pump mechanism installed below the casing. The gas brought to the surface through tubing is then diverted to a compressor station facility. Here it is purified and pressurized to acceptable levels for transit through the natural gas pipeline system making its way to end users across the country.

An oil or gas well, in comparison, only extracts from the petroleum layer and leaves the water, or aquifer, layer intact. Drilling CBM wells are cost-effective and commercially marketable. With state-of-the-art methodologies of methane coalbed extraction, shareholder ROIs are elevated.

United Energy – Providing energy solutions for America’s future energy needs  

One of these methodologies is a proprietary well-pumping solution for the production of CBM wells. This innovative pump dramatically reduces operating costs of water-producing wells while eliminating the surface pump jack and other high-maintenance pumping expenses that have burdened previous operators. Considering the acquisition of abandoned CBM wells aligns with United Energy’s three-fold corporate strategy of Exploration & Development, Technology, and Oil & Fuel Storage

It’s not without completing significant due diligence that United Energy corporate decisions are made. The US Geological Survey’s assessment provides a scientific foundation for quality business determinations while also embracing innovative energy efficiencies. Profitability, Responsibility, and Sustainability are once again at the forefront of United Energy’s pursuit of their new corporate direction as seen in considering the potential of future CBM operations.