Miller Petroleum Inc. announced Monday that it finished thetransportation system for what it calls the first commercialcoalbed methane project in Kentucky. The Huntsville,Tennessee-based company completed and started service on a 4.5mile, six-inch pipeline extension that draws 200-220 Mcf/d fromfour coalbed methane wells located in southeastern Kentucky. Thegas, which the company said rates 980 Btu/Mcf, will be injectedinto the Columbia pipeline system and sold by a third party. Fortymore wells are scheduled to be drilled on this site in 1999. Thecompany estimates the finding cost for the project to average$.35/Mcf.

“This is part of a new trend in the Appalachian Basin. Coalbedmethane just started being drilled in the area three to four yearsago,” said Ron Griffith, president of Miller Petroleum. “Nobody hadthought to do it in this area before. Now, we have the chance toaccess what we think will be something like 70 or 80 Bcf at a verylow cost.”

John Bonar, vice president, engineering, said that otherproducers in the Appalachian Basin report finding costs between$.64-.90 /Mcf. He said Miller Petroleum’s costs are so low becauseof the simplicity of the wells and low operating costs. “Thesewells are bare bones. Essentially, all we do is cement casing fromthe surface through the fresh water aquifers and complete the wellsopen-hole, keeping cost at a minimum.In addition, our operatingcosts are only $.20/Mcf. One reason for the low operating cost isthat we have had no water produced with the gas, as is the case inmost [coalbed methane] projects.”

Miller Petroleum purchased the 40,000 acre plot for $2.1 millionfrom AKS Energy, an Arakis Energy subsidiary, in December of 1997.The land holds an estimated 350 economically viable drillinglocations, according to Miller Petroleum. The extension builds offof 16.5 miles of pipeline AKS used to transport conventional gas.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.