COALBED METHANE GOING INTERNATIONAL
Up Until Now, Coalbed Methane was a Local Energy Source,
but is Now Being Shipped as LNG
By Roberto Chellini, Associate Publisher
Coalbed methane (CBM) is the natural gas that spontaneously develops
in coal formations and in small proportions is released to the atmosphere
without being detected.
With the advent of the industrial era,
based on coal energy, this natural gas
was considered a danger, and extensive effort was expended to get rid of
it. Nevertheless, in spite of forced ventilation of mine tunnels and the discovery of the Davy safety lamp, mixtures
of this gas in proportions of 4 to 14%
with air produce an explosive mixture
called firedamp. This is responsible for
many catastrophic events that have
killed thousands of miners. One of the
largest accidents recorded happened in
1907 in Courrières, France, where 1099
miners were killed.
The reason many compressor manufacturers are still located in coal-mine districts is associated with the
requirement of compressed air needed to increase production and safety
in coal mines.
The shift from a dangerous gas to a
useful fuel is recent. The first application of CBM began just over 20 years
ago in the United States and Canada,
where electric power was being produced by gas engine-driven generators.
This use spread around the world, but,
up until now, always on a local basis.
More recently, an investigation has
been carried out to assess the
amount of CBM that could be extracted from a given coal district and
whether this could justify building an
infrastructure necessary to export as
LNG over long distances.
Several energy companies showed
interest in this sort of business in
Australia where the Queensland coal
deposits are said to contain considerable amounts of CBM that could justify high investments. However, the
present global economic slowdown
has delayed these projects with a
“wait and see” pause.
At the end of 2009, Indonesia
awarded the Sanga-Sanga CBM production sharing contract (PSC) to a consortium of BP and ENI, which directly, or
through their affiliates, holds just over
75% (divided in equal parts) while the
remaining 20% is held by Opicoil and
4.375% by Universe Gas and Oil.
The consortium is paying a US$4 million signature bonus for the contract
and has committed to a $38 million
work program. An appraisal program
will be carried out to determine the
block’s production capacity and refine
current reserve estimates, with the aim
of eventually supplying the Bontang
LNG export terminal. This project is the
first significant CBM project to be developed in Indonesia and could become
the world’s first CBM-to-LNG project.
Vico, a 50/50 joint venture between
BP and ENI, has been producing conventional gas from the Sanga-Sanga
blocks, in the Katai Basin, East
Kalimantan (former Borneo), for more
than 40 years. Some of the Sanga-Sanga CBM PSC extends into the
same area as conventional gas. The
project to exploit CBM reserves will
thus benefit from existing production
infrastructure and pipelines to transfer
the gas to domestic customers and to
the Bontang LNG facility.
The Sanga-Sanga CBM-PSC covers an
area of 656 sq.mi. (1700 km2) and is estimated to hold more than 3992 Bcf
(113 x 109 m3) of gas. Indonesia is said
to hold significant CBM reserves estimated around 449 Tcf ( 12. 7 x 1012 m3).
It looks like the Indonesian decision
Roberto Chellini
to go ahead with CBM commercialization has given a push to Australian projects in the field. In fact, in a presentation to investors on Dec. 9, 2009, Santos
CEO David Knox, said that when the
company makes its final investment decision (March 2010) on the first train on
the Gladstone CBM-to-LNG project, it
will submit plans to the board for a second train to be built back to back with
the first. The Gladstone project aims to
export the significant Queensland CBM
reserves to Asian countries.
Santos first announced the Gladstone plans, estimated to cost AUD7
billions, in July 2007. The plant will
have an initial capacity of 3 million
tons/annum (tpa) ( 4. 1 x 109 m3). First
LNG shipment is scheduled for 2014.
Originally, the second train, of the
same size, was scheduled to be built
after the first one was in operation,
but construction is now expected to
be completed so that the plant will be
operational in 2016.
In May 2008, Petronas from Malaysia
bought a 40% stake in the project for
US$2.51 billion. The move to bring in
technical expertise and finance from
major LNG producers, has evidently
strengthened Santos’ development
plans for the Gladstone facility.
Paralleling the Santos project is the
Curtis LNG project from the BG Group.
Queensland Gas Co., fully owned by
BG, is planning to produce CBM from
its 2896 sq.mi. (7500 km2) concession
in the Surat Basin (South Queensland)
and transport it, via a 236 mi. (380 km)
long pipeline, to the Curtis Island, near
Gladstone, where it will be reduced to
LNG for export to the Asian market.
Bechtel was selected for the front-end engineering design of the plant.
The contract will be extended to include procurement and construction
following the final investment decision on the project scheduled for
early 2010. The plant is being designed with one production train initially to supply 3 to 4 million tpa ( 4. 1
to 5. 48 x109 m3) of LNG, with potential expansion, via additional trains, to
12 million tpa ( 16. 44 x109 m3) subject
to additional gas reserves. ;
