Coal bed Methane (CBM) Discussion : What is it?

[HollandPark]

EXCERPT:: from Interview with Robert Bell, President of Stealth Ventures

=================

 

What exactly is coal bed methane

to the rookie investor?

 

R.B: Methane is the purest form of natural gas. Coal bed methane

exists naturally in the coal and is created during coalification. Methane has a slight affinity to the coal, so rather than being stored under compression in holes in the rock, It is attached to the coal at the molecular level. It's a very effective storage mechanism – you can store up to six times as much gas by volume in coal as you get in good porosity conventional reservoirs with gas stored under compression. The technical challenge is drilling the coal with minimal damage and getting commercial rates of gas production from lower pressure reservoirs.

 

D.P: I guess the key to this of course, is finding the coal first, is that correct?

 

R.B: Actually, in most of the CBM basins that are being pursued, we

know the coal is there. In the Western Canadian basins we've had

conventional wells drilled through the coals. In areas like Nova Scotia where we are operating, we are working with over 1000 core holes that were drilled for mining operations, so we have very good data on where the coals are.

 

Testing the gas contents of the coals has been part of the process of

evaluating CBM resources in the last few years. In Nova Scotia, there

were test wells drilled in the mid-1990's which gave us a good gas content data on those coals. We know how much coal is there and we

know how much gas is in the coal. The key to all CBM plays has been

tweaking existing technologies or even developing new ones to get

commercial levels of production from each unique coal basin.

 

D.P: Usually, water is associated with some of these plays and sometimes it's a problem. Correct?

 

R.B: They definitely vary. The Horseshoe Canyon in Alberta is the only

'dry' coal I know of and it is wet for much of the basin. The coals we

are working with in Nova Scotia are wet coals, but they have very high

gas contents and we do not have offsetting lithologies that will give us any water – they are very dense shales. So we are dealing with relatively low water to gas ratios or high gas to water ratios.

 

D.P: In some instances, we hear that you drill a well and sometimes

you'll have water production for months if not a year before you actually have the gas being produced. Is that correct?

 

R.B: We are not looking at that so much in any of the plays being developed in Canada. Certainly some of the pilot projects on the Manville where they were fracing, and perhaps fracing into offsetting

lithologies, they ran into those issues. The Powder River Basin in

Colorado can have very low gas saturations that require the reservoir

pressure to be dropped significantly by producing water before the

gas will flow. We are looking at fully saturated coals in Nova Scotia

which should mean we will get gas with our water immediately. We do

expect the ratios to get better over time.

 

D.P: There are some enormous numbers being bounced around with

how much gas you might have in place in Nova Scotia. The number of

one trillion cubic feet plus?

 

R.B: We recently received and announced a NI-51-101 compliant report

from Sproule Associates. It recognizes a gross Discovered CBM

Resource or 'gas in place' number of 1.6 TCF on the two properties in

Nova Scotia. It reflects the large amount of data we had on these properties with coring for the mining operations, six or seven test wells drilled for CBM in the 1990's and previous data collection programs. What we haven't got yet is a proven or even probable recovery factor or rate of production. That is the main purpose of Stealth Ventures – moving resource to reserves by showing commercially viable levels of productivity.

 

D.P: Is there a rule of thumb number that you can come up with

or could this come at either end of the scale.

 

R.B: There is still a broad range of possibilities. We don't know

where we are going to fall in that yet. We presented at the CBM

Conference with about six other companies a few months ago and the range on their expectations of ultimate recoveries for the

basins they were working in ran up to well over 50%. The conservative

number would be 10% and some basins will never be commercial. Rate of production can vary from well to well within basins and coal seams and that is the reason Stealth is conducting multi-well tests in Nova Scotia.

 

@: http://www.stockhouse.com/blogs.asp?page=v...amp;postID=1520

[polo]

This looks interesting! some dd is needed first tho' and perhaps a pullback in price!

http://www.fool.com/investing/value/2007/0...ane-please.aspx

Take My Methane -- Please! By Toby Shute June 13, 2007

............. On Monday, CNX Gas (NYSE: CXG) announced that it acquired Peabody Energy's (NYSE: BTU) coal bed methane and natural gas rights to roughly one million acres for $66.5 million. It appears to be a rather stunning value,......................more

http://finance.yahoo.com/q?s=CXG

http://bigcharts.marketwatch.com/charts/bi...&mocktick=1