This paper discusses the economics of coal-bed methane production in the Warrior Basin under a variety of production strategies. Traditional development practices in the basin have used such techniques as hydraulic fracture stimulation in the single major coal seam, with wells spaced relatively close together on a square shaped pattern. This paper examines the enhancement of production using larger stimulations along with the corresponding economic impacts. Also examined are the effects of using multiple completions on several coal seams in the Pratt, Mary Lee, and Black Creek coal groups to further increase production from a single well. Finally, the impacts on production of drilling on various sized spacings and drilling on elongated pattern shapes to take advantage of permeability anisotropy are simulated. The production streams are then utilized in a detailed cost and economics model to determine the minimum gas price required for various rates of return on investment.

The effects of technology and production strategies for coalbed methane are forecast using a detailed two-phase, dual-porosity finite-difference simulator to predict both gas and water production rates. These rates are then used in the cost and economics model to determine equipment size and compression costs as well as generating revenue streams on which to calculate discounted cash flow. Costs are also determined by the depth of the seams, and in the case of stimulation, the thickness of the treated interval. The majority of the detailed reservoir data required to run the simulator were determined through field and labora tory tests at the Gas Research Institute's Rock Creek Multi-Seam site.

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