CBM Coal Bed Methane Industry in India Part 1

With this post, we are kicking-off the “Industry Overview” series at Octave Simulation’s knowledge sharing platform OcSPad. Targeting the “unconventional energy” segment in the energy sector and with India as the geography in focus, we will provide you an overview of the rapidly evolving “Coal Bed Methane” industry.

Coal Bed Methane is natural gas with high concentration of methane. It is produced during the coalification process and due to very high pressure conditions, produced CBM gets trapped and stays adsorbed on the internal surface of the coal matrix.

Adsorption process allows coal to store multiple times more gas than a conventional gas reservoir, where gas is trapped above oil or reservoir rock.

Extraction: For some reserves, horizontal drilling and fracturing of the beds can be utilized to extract and to release gas (desorption process). However, for most assets water accompanies CBM as a byproduct and should be pumped out first to reduce pressure in the seam and hence allow the gas to escape. Since a unique process of reservoir stimulation is employed to achieve economically viable production, CBM is categorized as unconventional gas.

Technical factors such as adsorption capacity and hydraulic permeability of coal determine the asset/product quality and CBM production. Similarly, commercial viability of the asset is dependent on drilling cost which in turn depends on geological conditions (good coal thickness, gas content/saturation, and permeability), capital and operating costs, and market prices.

In commercial production terms CBM is classified as:

  • Coal Mine Methane – Undertaken by mining companies
  • Abandoned Mine Methane – Undertaken by mining companies
  • Virgin Coal bed Methane – Undertaken by natural gas production companies

CBM production cycle can further be broken into three stages as described below:

  • Dewatering Stage: More water is pumped out/produced than the gas resulting in pressure reduction at the reservoir and hence adsorbed gas is further released. CBM production is building up at this stage.
  • Stable Production: This is seen as a plateau in the production curve such that water production is stable and gas production is maximum.
  • Decline Stage: CBM production goes down during this stage and ultimately well becomes uneconomical to operate.
Coal Bed Methane Market

CBM extraction and commercialization commenced in USA, which also boasts the most mature market at present with production nearing 5 bcf/day. Excellent reserve quality in terms of gas saturation levels and high permeability has favoured asset exploitation in USA and Australia in the past and now in Indonesia. While China also boasts reserves more than 500 tcf, asset quality and poor geology is a big challenge toward reserve exploitation. However, favourable regulatory framework and policies by the Chinese Government and increasing gas prices in Asia is a positive sign for Chinese CBM market, and it is expected to pick-up going forward.

CBM production is expected to go down in USA going forward as the reserves enter depletion phase. Several CBM to Liquefied Natural Gas (LNG) projects have been on the way in Australia and the most popular among them being Gladstone LNG project.

Overall, it is expected that CBM production in Asia will reach 3460 bcf by 2020 with nearly 60% contribution from Australian CBM and the rest from Indonesia, China, and India.

Major International Players
  • USA: ConocoPhilips, Chevron, Exxon Mobil,BP, Anadarko
  • Australia: ConocoPhilips, Santos, KoGas, Total, Shell, PetroChina
  • Indonesia: Santos, BP, Total, ENI, ExxonMobil
  • China: BHP, BP, ConocoPhilips, Chevron





Author: Nidhi Bansal - Nidhi is a Chemical Engineer from IIT Delhi and INSEAD MBA. She has extensive experience in energy sector with organizations such as Shell, Technip, and British Gas.

In Part 2 of our post, we will cover Coal Bed Methane market in India, provide an overview of the current status, how the market has evolved, major players in Indian market, and what to expect going forward. Stay tuned!

About nbansal
Chemical Engineer IIT Delhi, INSEAD MBA, Octavesim
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