Canada’s fledgling coalbed methane production is rapidly maturing into an industry force, with a new forecast by the Alberta Energy and Utilities Board projecting 25-fold growth over the next 10 years.
Striking early successes with coal gas prompted the AEUB, a regulator renowned for realistic conservatism, to take it seriously as a supply source in the 2005 edition of its annual review of oil and gas reserves in the chief producing province.
“CBM has the potential to become a significant supply source in Alberta over the next 10 years,” the report says in devoting a chapter to the field for the first time in the 67-year history of the board. “The production of CBM is expected to increase from 0.6 billion cubic metres (21 Bcf) in 2004 to 15.2 billion cubic metres (540 Bcf) in 2014.” The AEUB added, “This represents an increase from less than 0.5% in 2004 to about 12% in 2014 of total Alberta marketable gas production.”
All Canadian coalbed methane production to date is in Alberta, home to about 80% of the nation’s conventional gas output as well. The production forecast grew out of the industry’s initial reserve bookings, as inaugural commercial output entitled companies to start carrying CBM inventories on their books. The AEUB estimates Alberta’s remaining established reserves of coalbed methane at about 263 Bcf, up eight-fold from a nominal eight Bcf carried on the board’s books a year ago.
The board acknowledges its official bookings recognize only a fraction of current industry activity, and that CBM development to date just skims the surface of its Alberta potential. The province is carpeted in coal seams. The AEUB points to the Alberta Geological Survey’s “constrained” estimate of CBM awaiting development, which is 500 Tcf, after making allowances for restrictions against future exploitation imposed by the depth and thickness of coal seams.
The AEUB leaves the future open to large increases in CBM reserves and production capabilities, observing that new resource harvesting techniques are still in relatively early stages of development but already show clear signs of growing up into large-scale field operations.
“Current industry practice suggests that long-term CBM production will be from project-style developments combining recompletions of existing wells (intersecting previously neglected coal seams) with the drilling of new development wells,” the board says. “Active exploration and pilot programs of various sizes are currently testing CBM production, but these have no commercial gas production . . . reserves have not been booked, pending commercial production.”
The board also observes that, on top of strong gas prices, Canadian producers have a natural motivation to accelerate CBM activity. Conventional reserves are poised to run down after almost 50 years of almost continuous production growth. The board forecasts Alberta’s conventional production will remain flat at the recent annual level of about five Tcf in 2005 then decline at a rate of 2.5% per year.
“CBM production is forecast to supplement the supply of conventional gas in the province,” the AEUB says. But with coal gas development still in its infancy, the board makes no attempt to rate whether coal gas has potential to make up fully for the forecast decline in conventional wells or even make total Canadian production resume growing.
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