Critical Success Factors of CBM Development ¬Implications of Two Strategies to Global Development

The US currently gets almost 30% of its gas from unconventional resources and CBM makes up 10% of this, with projections of strong future ramp up. One strong indicator is drilling activity for CBM, which is rapidly growing in the U.S and Canada. In 2007, it is estimated that there was 20% increase of CBM completions in the North America. This helps make the US one of the leaders in CBM and a model for other countries hoping to develop CBM. The North American model exists due to the extensive infrastructure; strong gas prices, strong demand and a declining conventional resource base. Outside of the North America, another key region for CBM is Australia. The country contains about 30 coal-bearing basins, mostly Permian and Mesozoic in age. Based on IHS data, proven reserves in Australia have been estimated at about 10 tcf of gas. Adequate exploration efforts can potentially increase this number to 100 tcf level. However, the two locations are very different from a business model or strategy stand point. In North America, the CBM business is run by traditional oil and gas companies. To monetize the production, CBM producers utilize exiting gas transportation systems and distribution networks. They compete with other sources of supply. While in Australia, the power market and lack of alternatives drive the need from CBM. A typical Australian CBM project is led by a power generation company who moves upstream only to get fuel for power and energy. This tends to be an integrated effort with the company involved in the CBM well site, water management facilities, a 100 km gas transmission pipeline, and the power generation plant. A review of the global database of potential and other active CBM plays indicates that these two strategies/models are applicable in other areas and could also provide some guidance into development of new areas.