Coalbed Methane Powder River Basin

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Coalbed Methane Powder River Basin

• Goolsby, Finley, Assoc.
• Consultants
• to the Energy Industry
• September 27, 2001

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Introduction

• What is Coalbed Methane?
• Wyoming and Coalbed Methane
• Where is the Powder River Basin?

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Coalbed Methane

• Natural gas
• CH4
• Simplest hydrocarbon
• Clean burning
• Used for residential heating
• Used to generate electricity

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Coalbed methane targets in Wyoming (Jones and De
Bruin, 1990).
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Powder River Basin
Montana
Powder River Basin
Wyoming
Nebraska
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Basin Size

• 16.5 million acres
• 14 million acres in Wyoming, 2.5 million acres in
  Montana
• 6 million acres prospective development
• Industry predicts 30,00040,000 wells in Wyoming
  and Montana

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Geology

• Stratigraphy
• Coals

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Figure 1. Coalbed methane targets in Wyoming
(Jones and De Bruin, 1990).
Geologic Time
Rocks With Coals
Cenozoic
Tertiary
Wasach Formation
Eocene
Fort Union Formation
Paleocene
Mesozoic
Cretaceous
Jurassic
Triassic
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Generalized east-west cross section across the
Powder River Basin, Wyoming. (DeBruin, Lyman,
Jones, and Cook 2001)
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Cretaceous/Paleocene contact Clinkers Mine
LBAs Cretaceous Oil Fields
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• Thickest Coal Seam Isopach
• Over 50of Coal in Single Seam
• X-section
• South Hilight to
• Meadow Creek
• Principle Coals
• Anderson
• Wyodak

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MEADOW
HARTZOG
HOUSE
SOUTH
W
E
CREEK
DRAW
CREEK
HILIGHT
5800
5800
4800
4800
3800
3800
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• X-section
• Lighthouse to
• basin center
• Principle Coals
• Anderson
• Wyodak

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• X-section
• Rawhide LBA to
• basin center
• Principle Coals
• Anderson
• Canyon

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• X-section
• Recluse to
• basin center
• Principle Coals
• Schwartz
• Anderson
• Canyon
• Cook
• Wall

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• X-section
• Bone Pile to
• Dead Horse Creek
• Principle Coals
• Anderson
• Wyodak
• Canyon
• Wall
• Pawnee

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• Shifting Deposition through
• Late Paleocene time
• Wyodak Limit
• Big George

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Production

• Steps Taken Before Drilling a Well
• Coalbed Methane Wells
• Reserves

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STEPS TAKEN BEFORE DRILLING A WELL

• Technical Studies
• General
• Federal Requirements
• Other Factors

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STEPS TAKEN BEFORE DRILLING A WELL

• TECHNICAL STUDIES
• Geological
• Hydrological
• Reservoir Eng.
• Production Eng.
• ETC.

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STEPS TAKEN BEFORE DRILLING A WELL

• GENERAL
• Land Acquisition/title
• Landowner/surface agreements
• Survey location
• Pipeline/gas gathering agreements
• Contract with drilling company
• Permit to drill
• WATER DISCHARGE PERMITS

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STEPS TAKEN BEFORE DRILLING A WELL

• ADDITIONAL FEDERAL REQUIREMENTS
• Federal permit to drill
• Public comment period
• NPDES and NEPA compliance
• Air quality issues, raptor, archeological, botany
  surveys, etc.
• POSSIBLE EA OR EIS

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STEPS TAKEN BEFORE DRILLING A WELL

• OTHER FACTORS
• Price variations
• Regulatory changes
• TIME

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Coalbed Methane Wells
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Schematic diagram showing open-hole completion
technique for a typical coalbed methane well in
the Powder River Basin. (DeBruin, Lyman, Jones,
Cook 2001
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Typical coalbed methane drilling rig in Hawk
Point oil field about 20 miles south of Gillette,
Wyoming. (DeBruin, Lyman, Jones, and Cook 2001)
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Reserves

• Estimates for Powder River Basin
• Data
• Coal Volume
• Gas Content
• Volumetric Calculations
• Conclusions

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Data
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COAL VOLUME AND TONNAGE
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GAS CONTENT METHODOLOGY

• Obtained all non-proprietary Powder River Basin
  coal gas content data from the BLM in Casper
• Results of this data are suspect and appear to
  underestimate gas content in areas currently
  producing coal bed methane
• Published isotherm data from adsorption studies
  appear to overestimate gas content in areas
  currently producing coal bed methane

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Average methane adsorption isotherm based on
averaged synthesized data from coal cores. Data
are from USGS, industry sources, and WOGCC.
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GAS CONTENT METHODOLOGY

• Estimated gas content versus depth using current
  production to constrain gas content values
• Verified gas content by depth estimates with
  various operators who have proprietary gas
  content data from a wide depth range
• Gas content estimates used in our study appear to
  be reasonable but slightly conservative

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PRB VOLUMETRICS
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CONCLUSIONS

• Approximately 37.5 TCFGIP from coals thicker than
  20 feet and deeper than 200 feet
• Currently accepted recovery factors range from
  50 to 90
• Assuming a recovery factor of 67, the Powder
  River Basin Coal Bed Methane play holds on the
  order of 25 TCF recoverable gas
• We believe these estimates are reasonable
  although they may be somewhat conservative

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What does TCF mean?
1,000 1,000,000 1,000,000,000 1,000,000,000,000
1 thousand cubic feet 1 million cubic feet 1
billion cubic feet 1 trillion cubic feet
MCF MMCF BCF TCF
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Growth

• Production
• Forecasts
• What this means to Wyoming
• Factors affecting growth

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Yearly production and number of producing wells
for coalbed methane in the Powder River Basin,
Wyoming, 1989 through 2000. (DeBruin, Lyman,
Jones, and Cook 2001)
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Yearly production and number of producing wells
for coalbed methane in the Powder River Basin,
Wyoming, 1989 through 2000, with forecasts to
2010. (DeBruin, Lyman, Jones, and Cook 2001)
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WHAT DOES THIS MEAN TO THE STATE?

• Currently producing 500 million cubic feet per
  day
• State receives
• 12.5-16.67 royalty on state lands
• 6.25 royalty on federal lands
• 6.25 severance tax on ALL lands
• Counties receive approximately 6 ad valorem tax
  on all wells within county

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WHAT DOES THIS MEAN TO THE STATE?
Assume price of 3.00/thousand cubic feet and 500
million cubic feet per day produced State
receives approximately 150,000/day or 54
million/year Counties receive approximately
90,000/day or 33 million/year
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FACTORS AFFECTING GROWTH

• NEPA and permitting processes
• Water discharge permits
• Inter-state negotiations for water quality
• Multiple coal completion technology
• Infrastructure
• Price uncertainty

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Why now?

• When Drake completed his first oil well in
  Pennsylvania in 1859, it was considered an
  unconventional way to produce oil (previously it
  was done by killing whales).
• Jimmy Goolsby, 2001

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Questions?