Abstract

The National Energy Board (NEB) forecasts that unconventional gas will be required to meet Canadian demand by the year 2008 and could constitute up to 65 per cent of supply by 2025. Our study of the coalbed methane ("CBM") potential for the Plains area of Alberta estimates a constrained gas resource of 187 Tcf of gas-in-place. Our study considered the major prospective coal horizons (Cretaceous to Early Tertiary), as well as the technical and fiscal constraints to development. Cost supply curves for future CBM development provide insight into the gas prices required to meet the NEB's supply deficiency.

Introduction

This paper presents a technical and economic assessment of the coalbed methane resource potential in the Plains area of Alberta.

Gas resources classified as unconventional are known to exist within the Western Canada Sedimentary Basin ("WCSB"). Specifically, these resources can be categorized as low permeability resources ("tight gas") and coalbed methane ("CBM"). Large quantities of tight gas have been discovered and delineated in the Deep Basin area of Alberta and British Columbia; however, these resources are not recognized as reserves by regulatory authorities. The largest potential for unconventional gas reserve additions may exist locked up in coal seams found throughout a large portion of Alberta and in parts of British Columbia.

Part 1 of the study considered coal depth and thickness for 8 major coal horizons (Ardley, Carbon-Thompson, Lower Edmonton, Lethbridge, Taber, McKay, Upper and Lower Mannville) to assess the magnitude of the unconstrained CBM resource. Part 2 of the study utilized technical constraints to assess the magnitude of the potential developable CBM resource. The reservoir constraints used were minimum and maximum depth and vitrinite reflectance, minimum gas content and coal to coal plus rock ratio. Part 3 of the study utilized a range of reservoir parameters to accurately characterize the Alberta plains resource. These parameter ranges were then input into a reservoir simulation model to develop gas and water production forecasts. These forecasts were utilized with finding and development cost estimates, a resource distribution and an acceptable rate-of-return on investment to generate a CBM cost supply curve for the Plains area of Alberta.

U.S. Statistics.

While the CBM industry is still in its infancy in Alberta, the technology of extracting methane from coal has been applied to a growing number of projects in the U.S. in recent years. In 1998, the U.S. produced 3.27 Bcf per day of gas, for a total of 1,193 Bcf per year (20 percent of the WCSB conventional gas production). This is 10 percent higher than the 1,085 Bcf produced in 1997 and over 6 times the production of 1990.

The Black Warrior Basin in Alabama and the San Juan Basin in New Mexico and Colorado have been the leading CBM proudcing regions. However, several new CBM projects in the U.S. are indicating ecomomic developemtn potential without the assistance of the Uncoventional Fuels Tax Credit.

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