The gas contained in coal layers is an important energy resource capable of supporting the growing increase in energy demand. As unconventional deposits of natural gas, in addition to the coal layers, we can find natural gas in shales and low permeability sandstones. In this paper, we will focus only on the methane content of coal bed methane (CBM).

The first signs of the energy use of coal date back to 200 BC, according to Chinese records. In our days, and on a world scale, coal stands as the second type of fuel in order of consumption, although in our country its energy relevance has decreased in recent years. Due to the increase in coal consumption in Asia mainly, it is expected to become the first source of energy worldwide in the coming years.

The gas contained in the coal is a byproduct of the process of maturing it, as will be detailed later, which can be increased later due to different mechanisms. Initially, this gas was considered dangerous, so it was to reduce its concentration to increase safety in the mines. At present, this vision has changed and, far from diluting it, the maximum use of its energy potential is pursued.

The feasibility assessments for CBM exploitation cover a large number of complex of factors usually not available from the data sources of every coal basin. There is a need of performing a first approach of the economic feasibility of CBM exploitation with a simplified method.

This work is focused on the economic viability of the CBM production with the aim of knowing the possible development and factors influencing it. Several tables are proposed as a decision support system for CBM feasibility assessments.

The final use of these tables and factors will facilitate the first approach form of the economic feasibility of CBM extraction to carry out future detailed analysis of a coal basin.

We have different origins of methane in coal layer, CBM (coal bed methane), which we can differentiate as follows:

・ Methane from active mines, CMM (coal mine methane). It can also be obtained from ventilation air, VAM (ventilation air methane)

・ Extraction of methane from abandoned mines, AMM (abandoned mine methane)

・ Progress of surface surveys before the underground exploitation of coal. If the coal has not been extracted we would speak of methane in virgin carbon layer, VCBM (virgin coalbed methane).

・ ECBM (enhanced coalbed methane), where the recovery of VCBM is stimulated by the injection of N₂ or CO₂. This method can be combined with the storage of CO₂.

The following Table 1 shows the methane concentration most commonly obtained by each method and the gas flow in each case.

The conventional exploitation of the VCBM is carried out by vertical drilling and hydraulic fracturing that helps to desorb the methane contained in the coal, although methods based on horizontal drilling are currently being successfully tested, thus recovering the VCBM more profitably.

The viability of a project of this type varies from 4 to 8 m³ of CH₄/t of coal. The fundamental problems are the low permeability of coal, for which the layer is stimulated by various methods. This procedure requires a high number of surveys, which increases the operating costs.

Most coals have a porosity saturated in water. If a reduction of this pressure is caused by extracting the water by pumping, the methane of the micropores begins to desorb, which diffuses slowly through the fissures until reaching the sounding by which the depression has been caused.

The countries with the greatest potential for VCBM would be Russia, Canada, China, Australia and the United States. Even though the VCBM is a great source of clean energy, only the United States and Australia have well-established commercial productions [1] .

For the methane in the coal layers to be an economically exploitable resource, the coal must present a series of characteristics that have been demonstrated after the experience acquired in the wells that are already in operation. It is useless to have a very powerful layer of coal if it has not produced the necessary gas or has not been able to store it.

Many times the exploration strategies are based on the location of the highest accumulated height, ignoring the interrelation between the geological and hydrogeological factors that affect the productivity of the MBC, methodological neglect that leads to great failures in the exploration.

The MBC productivity of a coal deposit is determined by six closely interrelated factors:

・ Tectonic and structural framework.

・ Depositional framework and coal distribution.

・ Rank and quality of coal.

・ Gas content.

・ Hydrodynamics.

・ Permeability.

The fairway is the synergy of several factors that originate the areas with the highest gas content. They are characterized by:

・ Groundwater flow towards the center of the basin.

・ Generation of secondary biogenic gas.

・ High coal rank.

・ High concentration of gas towards flow barriers, which would cause an upward flow to discharge areas.

・ Conventional gas entrapment migrated or in solution.

The objective of this chapter is to establish initial parameters of the reserve in order to know its production. CBM production depends on several parameters. In this section we will detail the methodology used to determine them.

A methodology for the initial estimation of CBM resources and reserves easily extrapolated has been developed. This methodology will serve to determine in what amount the parameters of the reserve should vary to obtain the return on investment. The calculations have been made in Anglo-Saxon units, due to their greater development in calculation methods and they have been converted to units of the international system later for a better compression. It will consist on the determination of:

・ Coal saturation.

・ Absolute permeability.

・ Porosity, compressibility and pore volume

・ Calculation of gas production.

The estimation of gas production over time is carried out by developing the curves defined by García Arenas for the Department of Petroleum and Natural Gas Engineering of West Virginia [8] . They describe a curve model from two dimensionless parameters, tD and qD, which thanks to their dimensionless condition are able to simulate the production of gas in any basin. Figure 3 shows the typical CBM production curve in logarithmic scale. The equations used are Equations (2)-(4).

This method has been proven by specific simulation software for CBM, such as the CMG GEM, with good results.

q D = q q p e a k (2)

Equation (2) Adimensional peak flow [8]

t D = t · q p e a k G i (3)

Equation (3) Adimensional time factor [8]

where:

・ q_D: dimensionless peak flow.

・ Q: actual flow.

・ Q_peak: peak or maximum flow.

・ t_D: dimensionless time factor.

・ T: time in days.

・ G_i: amount of gas in place.

G_i is determined multiplying coal quanty per coal gas contents. The greatest difficulty lies in the estimation of peak flow. It will come de-terminated by:

q p e a k = q D ⋅ k ⋅ h ⋅ ( P m − P w f ) (4)

Equation (4) Peak flow [8]

where:

・ k: permeability.

・ h: height of coal layer.

・ P_m: initial pressure of the matrix.

・ P_wf: initial pressure in the fracture system.

We have all the data of previous stages except the q_peak, which is obtained through the following Figure 4.

In this section we will study the economic viability of CBM wells, in order to be able to decide on their exploitation. Once described, the development costs of a well type CBM will be defined for the selected cases. Later, the paths for the

recovery of the investment will be defined.

The CBM extraction has been considered with own funds, without any other type of financing or state, banking, European subsidy, etc. The main risk factors in the development of a project of this type are: the capacity of the gas pipeline or the consumption to be obtained, the prices of natural gas, the sale price of the producer’s gas and technological knowledge.

Three returns of investment will be defined, starting with the three of own funds. The first one will be an absolute return, for which the well covers the expenses generated by the gas generated, the second will be the one that gives us more profitability than an investment of 4% per year, and the third will also include the uncertainty of the investment that is considered at 8%. These returns will be calculated for four scenarios of variation in the price of natural gas.

As a last step, the development of a method has been reached so that, based on simple parameters of the gas deposit, it is possible to quickly determine the viability of the CBM extraction.

As described before, there are several parameters that condition the technical and economic viability of the development of a CBM project. Once analyzed the results on the technical and economic viability it is possible not only to know factors that affect the viable production, but also they can be quantified.

In this section we will quantify the minimum factors for viable production. It has been possible to develop a method to reduce the number of parameters and from it, to be able to determine the economic viability of the reserve. They are specified as:

・ Geometry of the reserve. Surface area and height.

・ Coal rank.

・ Gas in situ or amount of gas.

・ Permeability.

Based on these four parameters we should be able to know the possibility of extracting CBM.

The minimum amount of gas in situ was not found as relevant as initially

expected. The minimum quantity depends exclusively on the coal rank, varying from 12 m³/t pure in anthracites to 5 m³/t pure in high bituminous carbons in volatile type B. The rest of the minimum values of gas in situ can be seen in the following Table 8.

The rest of factors will depend on the profitability that you want to obtain in the project, so the data will be analyzed according to this objective. Thus, for a positive return (IRR > 0%) we will obtain the same minimum values as for a return greater than 4% or 8%. First let’s analyze the minimum values for positive profitable production

By developing the above, tables can be obtained that will determine the minimum values for viable production. Next, these tables will be exposed in which several parameters are evaluated:

・ IRR.

・ Price of natural gas.

・ Coal rank.

・ Gas in place (GIP).

・ Gas in situ (GIS) or amount of gas.

・ Height of the bad.

・ Permeability.

The input data would be the expected return or IRR, price of gas (scenario) and the rank of coal. In the cells corresponding to the other four factors: GIP, GIS, height and permeability, the minimum values for profitable production are determined, so that to obtain positive profitability all of them must be overcome.

A group of 24 tables, named as Table 15, have been developed, one for each profitability and price scenario of the gas valued, for 30 and 10 years of production respectively. Once the production time is set, 10 or 30 years, the first thing to look for in the tables will be the minimum profitability required: 0%, 4% or 8%. Next, the gas price scenario will be assessed. The next step will be to determine

the rank of the coal in our reserve.

Subsequently, we must verify that the permeability, height and gas and GIP values of the area affected by the well are greater than or equal to those defined in the corresponding table. The minimum GIP divided by the height will give a layer surface. This surface corrected with the dip will give us a surface area to drain, which will determine the minimum spacing of the wells.

As a remark it should be added that these tables are used to determine profitability for vertical drilling and without multilayer drilling. Summary tables for project viability are shown below.

The economic viability was calculated with three different profitability objectives for positive evaluation. The first one only contemplates the recovery of the investment (IRR > 0%), while the second and third raise the possibility of obtaining more return than an investment of 4% and 8%. For these projections, four possible scenarios were considered of natural gas price in the wholesale market: the current price (scenario 1), price reduction by 25% (scenario 2), price increase by 25% (scenario 3) and price increase 50% (scenario 4).

For the estimation of the economic viability, in a first stage, the annual production of each well was determined and, after this, it was the annual investment and operation costs. Next, revenues were defined for each of the proposed scenarios and profitability was analyzed for each case.

Recovering the results and the methodology followed, we obtained the possibility of carrying out a sensitivity analysis of the technical parameters of the reserve to economic profitability, which resulted in the development of user-friendly tables, through which we can determine the economic viability of any CBM reservation. These tables are based on the quantification of the following factors:

・ IRR.

・ Price of natural gas.

・ Coal rank.

・ Gas in place (GIP).

・ Gas in situ (GIS) or amount of gas.

・ Height.

・ Permeability.

For the use of these tables, the IRR and the gas price scenarios are data to be chosen by the designer, therefore subjective. The minimum gas quantity is only a function of the coal rank. Height and permeability are intimately linked. When the permeability is higher, the height needed to obtain profitability of well is reduced. The GIP is a function of GIS, height and spacing. From the above, it is clear that the tables will help to design the well spacing.

Applying these tables to the autonomous community of Castilla y León, it will be possible to know the amount of extractable gas in a profitable manner for 10 or 30 years of production. It will be carried out for gas prices corresponding to scenario 1, with returns of 0%, 4% and 8%.

Regarding the main geological and geomorphological factors and their relationship with the economic viability of CBM farms, the following conclusions can be drawn:

・ The amount of gas or gas in situ minimum required for viable production is dependent on the rank of coal. This is because for a final downhole pressure each coal can store a given adsorbed gas.

・ If the permeability is considered independent of the rank, the key factor to develop a project of this type regarding permeability is the height. Thus a layer with low height but high permeability can be exploitable in a cost-effective manner. The same statement can be established in the opposite direction, since height is usually a more familiar property in coal deposits. It can be inferred that for a given height, the CBM exploitation goes to depend very directly on the permeability obtained in drilling tests.

・ The greater the depth, the greater the cost of drilling, but the greater will be the gas adsorbed due to the pressure. The optimum depth to carry out a project of this type will vary between 500 and 1500 m. Above 1500 m drilling costs increase, as well as the technical complexity of it.

・ Regarding the variation in operating time, permeability becomes a key factor once it is shortened. A CBM farm will be more sensitive to exploitation times the lower its permeability. Permeabilities above 15 - 20 mD present low sensitivity to the reduction of production times.

・ The permeability, confirmed as a key factor, will depend exponentially on the width of the cleats network, while it will depend on the spacing in a linear manner, so the width of the cleats will be a crucial factor in the development of the project.

・ The expected production time will define very clearly the spacing of the wells. The greater the period of exploitation, the greater the spacing of the wells may be, a circumstance that will increase profitability due to the fact that the highest cost of a well of this type is drilling. The annual fixed operating and maintenance costs for more than 10 years are shown as low in the economic set of the operation, of the order of € 50,000/well per year. The spacing will be in the range of 500 and 800 m.

Regarding purely economic factors, the viability of a project of this type will depend more on the evolution of gas prices than on the required profitability. This high sensitivity to gas prices justifies the realization of the production analysis for the 4 different scenarios proposed.

The authors declare no conflicts of interest regarding the publication of this paper.

Gutiérrez, J.A., García, R. and Cadena, E. (2018) Novel Simplified Method for Coalbed Methane Feasibility Evaluation. International Journal of Clean Coal and Energy, 7, 59-92. https://doi.org/10.4236/ijcce.2018.74004