COAL SEAM METHANE IN AUSTRALIA

Dr Ian Gray, Director Sigra Pty Ltd
www.sigra.com.au

Published in Oil and Gas Australia, June 2002

Australia has been known to have huge CSM resources for a long period. Initially CSM was the bane of coal mines but was then recognised in the late 1970's to early 80's as a substantial resource. Efforts at getting gas out of the ground prior to mining failed because the focus was on using the wrong techniques in what were essentially coal mining areas. These had generally lower range permeabilities that did not suit barefoot completions, and had stress distributions and directional permeability characteristics that did not favour hydrofracture.

Despite these quite well known facts would be producers waxed in the late 1980's and 1990's with a fixed belief that if they used current United States exploration and production practise they would succeed. In fact Hematite Petroleum, North Queensland Energy, MIM, MGC and Conoco all failed and spent about $200 million doing so. What they demonstrated was that if exploration was not done to define reservoir conditions and if the wrong production techniques were employed then the economic production of gas from coal was most unlikely to be achieved in Australia.

Meanwhile the drainage of coal seams for mining progressed in leaps and bounds enabling mines to operate in high gas content coals with permeability as low as 0.5 millidarcies. This progress was linked to the development of long in-seam drilling techniques. Indeed most of the scientific and engineering advances associated with coal seam methane in Australia were driven by mining priorities. To stay in the business of coal mining miners simply had to overcome their gas problems and as a consequence they applied the necessary resources to achieve this. Currently about 100 km of in-seam holes are drilled each year for gas drainage from underground in NSW and Queensland.

Finally at the end of the last century a few people of vision started to think differently from the viewpoint of commercial coal seam methane. This change in attitude came about in terms of exploration and production techniques. Furthermore they managed to access some funds to develop their ideas.

From the exploration viewpoint groups have started to think about reserves other than those in the main coal mining areas. With this look in alternative areas has come the realisation that economic reservoirs may come in many forms. For example multiple thin seams which have a low gas content may be viable provided that they have an adequate permeability. Others looked for seams at greater depth but which were in low stress areas.

From the production viewpoint the major developments have come in the use of surface to in-seam medium radius drilling. This has the potential to gather gas economically from those coal seams that might be mined, ie the thicker, tighter units. This may be followed by the commercialization of tight radius technology which allows the drilling of horizontal laterals directly from a well base.

The real issues that confront a would be coal seam methane producer are:

1. Do we have access to a market?
2. Do we have coal?
3. Does the coal have gas?
4. Will the gas come out?
5. Can we get rid of the water produced?
6. What production technology should be employed?
7. Is the project financially viable?

The first question is really associated with location and competition whilst the next three are exploration issues. As a result of an adequate exploration programme it should be possible to answer the remaining questions to some degree. The real limitation is the certainty of knowledge gained from the exploration programme.

Coal seams may appear to be laterally continuous bodies but in reality they vary significantly and over quite short distances. For example within the space of a about 50 km the German Creek seam in Central Queensland changes its permeability from 3 to 1000 millidarcies at the same depth. The gas contained drops from about 15 cu.m/tonne to 0.5 cu.m/tonne in the same direction making it less than appealing from a gas producers viewpoint. Several mined seams in NSW have shown a reduction in permeability from several millidarcies to nothing in a several hundred metres. This change has been due to cleat infilling. Gas contents typically vary significantly over short distances and are certainly influenced by faulting and groundwater history. One can regularly find a change in gas content unrelated to depth of from 4 to 10 cu.m/tonne within one km.

In addition to lateral variations coals exhibit some unusual reservoir characteristics. The prime means of gas storage is in the coal itself, not the pore space. Gas flow occurs as diffusion through the coal to the cleats where mixed phase flow (gas and water) takes place. Flow from these cleats may lead into major fractures and thence on to the production well.

Flow due to diffusion is very much slower than that which may occur with the presence of even modest permeability. Because of this the cleat spacing is vitally important. If diffusion has to take place to widely spaced cleats then the prospects for production are grim. If the cleats are infilled then they lose their effectiveness.

The cleat permeability may be very dependent on effective stress such that it may decline an order of magnitude for a drop in reservoir pressure of 3 to 8 MPa. This characteristic may lead to the coals self sealing on production. More usually though it is balanced by shrinkage in the coal as it gives up gas. This effect de-stresses the coals and increases permeability. Indeed it is possible to produce from a coal seam and have the permeability decline by and order of magnitude initially around the wellbore only to have it then increase by two or three orders of magnitude during production. Knowing whether the permeability will decline or increase is extremely important.

Coals also frequently exhibit directional permeability characteristics. It not uncommon to have a three fold difference in permeability with direction and in some extreme circumstances this difference may be 30 or 100 fold. Usually this permeability variation is linked to cleating and the effective stress directions.

Knowing directional permeability is vital for the design of the production system.

Permeability due to major fractures may or may not exist. If it does then the permeability may be enhanced by more than an order of magnitude in the major fracture direction.

The conundrum facing the CSM explorer is how to cope with all of these variables. In reality it is not possible to identify all the variations in character and areal extent by an affordable exploration programme. Good testing techniques will identify some of the reservoir characteristics at the borehole being tested but it will never be economically feasible to drill enough holes to identify all the possible variations in a potential reservoir. These variations might be found if production takes place and the wells are monitored.

What needs to be understood before an exploration drilling programme starts is that there is a real possibility that the well being drilled will not show the character of the reservoir. Thus holes drilled on a 10 km spacing are regional indicators at best. To be able to have any real certainty on the continuity of a coal seam methane reservoir holes need to be drilled and tested much more closely at least in the order of 1 to 2 km spacing. This drilling may be by exploration or as part of an explore by production programme. If the latter then there is a need to have flexibility in the drilling programme and production methods to adjust for changes in the reservoir.

Because of coal's special reservoir characteristics there is a need to understand as much as possible about the reservoir before commencing production drilling. For example it is a waste of money putting a hydrofracture into highly directionally permeable seam where the in-situ stresses will cause the hydrofracture to go in the most unfavourable direction. In a similar vein it is a waste of money drilling directional holes in thin seams or seams with vertical permeability barriers.

The most effective way to undertake initial exploration is by wireline core drilling. This gives the opportunity to find out where the seams are, get core for gas content testing and for examination and to conduct permeability tests through the drill string without risk of losing equipment downhole. The hole can then be left with cemented in pressure transducers to monitor pressure changes brought about by any subsequent production wells or direct interference tests.

In all aspects of coal seam methane there is a need to conserve expenditure. Methane is not oil and for it to be economic drilling, production, piping and compressing costs need to be minimised. Nevertheless if developed correctly the gas from coal could economically meet much of the energy requirements of Australia's eastern seaboard for some decades.