Coal Bed Methane (CBM) may become as important for Asia and Australia, as shale gas has become for North America. This requires that the CBM industry manages to overcome critical commercial, technical and regulatory challenges. A DNV-facilitated study concludes that reliable verification schemes, more comprehensive performance monitoring systems, more specific environmental guidelines and more reliable risk mitigation options are needed to make this industry expand.
Almost 40 % of all global CBM reserves are located in China, Australia, India and Indonesia. Estimated reserves of 2800 Tcf are about 3 times the proven natural gas reserves of Qatar. With Australia leading the industrial development of CBM and with promising growth emerging in Asia, efficient measures to reduce project costs while preserving the environment are necessary.
CBM is a methane gas which with the help of hydrostatic pressure is kept locked within unmined coal seams. Because of its large surface, coal can store 7 times more gas than conventional methane reservoirs of equal rock volume. To release and extract CBM, large volumes of water have to be removed. Similar to shale gas extraction, fracturing is sometimes necessary. CBM is further characterized by high number of wells, more shallow drilling and low-pressure extraction.
Mr Hans Kristian Danielsen, Head of DNV Cleaner Energy in Australia, said “DNV is engaged in several mega LNG projects in Australia including CBM projects. In CBM-based LNG developments, we see gaps between competencies in project development practices of onshore contractors newly involved in CBM and the requirements of owners of mega LNG developments. DNV sees an opportunity to reduce project construction risks by establishing and aligning best practices through third party monitoring of project performance.”
“The study mapped out CBM-based LNG project developments and opportunities in Asia and Australia with a focus on safety and environmental considerations that are different from conventional gas project. The project identified the challenges and risk drivers that CBM companies face and also how DNV can help companies overcome these risks” says Chief Technology Officer of DNV Clean Technology Centre in Singapore, Dr Jens Petter Tronskar, “Companies which address and mitigate project risks at an early stage are well positioned to reduce the probabilities for budget and schedule overruns.”
The study concluded that CBM project performance can be improved through increased support from third party companies on validating project life cycle cost calculations. Such validation would adress both technical, safety and commercial matters. Third parties should validate concept evaluation of upstream CBM well facilities, downstream gas processing and export pipeline. Third party verification of CBM engineering designs, pipeline reliability and maintainability should be undertaken.
More effective and robust regulatory frameworks on environmental, social and economic aspects of CBM are needed in many countries in order to speed a safe and economical sound scaling of CBM projects. More comprehensive standards for environmental baseline assessments and for the disposal or treatment of produced water will also need to be established to further increase value of investments and reduce negative impacts on the environment. “DNV is now equipped to provide risk management services spanning from establishing regulatory frameworks and standards to on-site verification to the evolving CBM industry in Asia and Oceania, leveraging on our well established best practises from the conventional Offshore and Onshore Energy Industry” says Bjorn Tore Markusen, Managing Director of DNV’s Clean Technology Centre.