Harnessing coal gas

The industry is on the verge of producing gas direct from coal seams at a gas field near Huntly, south of Auckland, which could be as big as the Kupe gas field. The project is a breakthrough for the local energy scene, as it is the first to draw commercial quantities of gas directly from a coal bed, reports LINDSAY CLARK.

The Huntly coal seam gas project is operated by Coalbed Methane, a joint venture between Christchurch-based Solid Energy and Colorado-based Resource Development Technology (RDT), which operates coal bed methane fields in the US. The partners expect to decide in late 2008 whether to proceed with the next phase of commercialising the coal seam gas field. The gas could be fed directly into the North Island natural gas network or to the nearby Huntly power station.

Gas from coal fields is known throughout most of the world as coal bed methane gas, though in New Zealand it is officially called coal seam gas. The dry gas from coal is almost identical to the natural gas sourced from Maui, Kapuni and other petroleum fields, with both containing about 98 percent methane.

Brett Gamble, general manager new energy, responsible for coal seam gas for Solid Energy NZ, says exploration of gas resources in the north Huntly coalfield has, so far, identified between 25 petajoules (PJ) and 200 PJ. However, Solid Energy’s 2007 annual report says the potential could be as much as 300 PJ of gas, or similar in size to the Kupe gas field.

Gamble says six appraisal wells more than 400 metres deep were drilled into coal seams and began pumping out water, in mid-November 2007. Solid Energy will monitor water and gas flows from those appraisal wells over the next 12 months as a key input into the commercial field development decision.

The test wells were sunk in farmland near Ruawaro, about 10 kilometres west of Huntly, into the thick Kupakupa and Renown seams.They were equipped as potential full-scale production wells; drilled at each corner of a 500-metre-by-500-metre square, with a fifth well in the centre and a sixth one added later. Developing a commercial field involves drilling dozens of wells.

Although natural gas from petroleum fields and coal seam gas have similar qualities, they are formed by quite different processes. Gas in most natural gas fields is thermogenic, where the heating of high-rank coal, buried at depth for millions of years, drives off methane gas and oil, which escape into sandstone reservoirs.

Coal bed methane in low-rank coal, such as in Huntly’s sub-bituminous coal or in Southland’s lignite brown coal, is biogenically formed. This biogenic gas, which is the target of most coal bed methane projects, is the by-product of microbes living in the coal seams, which either reduce carbon dioxide to methane or ferment a small amount of the coal into methane.

The archea micro-organisms that create most of the methane in biogenic gas belong to a group called extremophiles. They can live under high temperature and significant pressure, such as on underwater volcanoes. Biogenic gas is typically formed in coal seams lying between 200 metres and 800 metres below the surface. In its research into this naturally occurring conversion of carbon dioxide into methane, Solid Energy is typing DNA from microbes in New Zealand coal seams, with a view to producing methane from unwanted carbon dioxide for energy use in the future.

Natural gas reservoirs deliver their highest production rates soon after they are completed, and then decline steadily. By contrast, output from coal bed methane wells tends to rise for the first few years, before it starts declining.

Coals have a much lower porosity than sandstone; typically less than one or two percent, compared with 25-30 percent in conventional natural gas reservoirs. However, some coals can store six to seven times more methane than the equivalent volume of rock in a conventional gas reservoir. The difference is that, while conventional natural gas reservoirs store gas in the pore spaces of the rock, coal beds store it inside the molecular structure of the coal. Some is also held in the fractures or ‘cleats’ in the coal, or is dissolved in the water trapped in those cracks.

Pumping water out of a coal seam is a little like uncorking a bottle of champagne. Once the water pressure in the coal has dropped, the gas is drawn out, much as popping a bottle allows the gas to fizz out of the liquid.

Gamble says one critical question when it comes to maximising gas productivity from coal bed methane fields is identifying the best way to design wells to boost gas flow. These techniques, used elsewhere in the petroleum industry, include fracturing the coal around the well with high-pressure water or oil, or an approach called ‘under-reaming’, which creates a large cavity around the well.

“We are confident that we can find a market for any gas, and should have around 15 to 20 years’ production,” he says.

The north Huntly area covers a 20-kilometre-by-20-kilometre area, and is actually only a small portion of the joint venture’s permitted Waikato coalfield. It is in a good location, right next to key gas pipelines, he adds.

With higher gas prices and increased confidence in new coal seam gas resources, the hunt is on to locate more of the same. A series of North Island coal seam gas exploration permits have been taken out or applied for, covering coalfields from the Manukau Harbour in South Auckland to inland Taranaki. Solid Energy also holds exploration permits on its own behalf over the inland Taranaki coalfields, and Gamble says there have been good gas showings from this area.

Christchurch-based L&M Coal Seam Gas, which has carried out extensive exploration throughout the country, is now concentrating on bringing three sub-bituminous coalfield permits – in Southland and south Otago, and in the Hawkdun lignite field in central Otago – to advanced stages of test production. Exploration manager, David Manhire, says he expects to have a clearer picture of the company’s coal seam gas resources once it, too, has pumped out water and allowed gas to flow.

The first mining permit for coal seam gas in New Zealand was granted in July 2007, to Wellington-based coal bed methane company Macdonald Investments. It covered a 170-square-kilometre area just outside Greymouth. Macdonald says that it may use the gas for a small electricity generation plant. The company, with Australian partner Chartwell, has applied for other exploration permits on the West Coast and north Waikato. A number of other companies are also exploring coal bed methane resources in the Waikato, West Coast, Otago and Southland.

Coal bed methane: A world perspective

Coal bed methane was first developed in the United States in the 1980s, with much of the production coming from the San Juan basin in Colorado and the Powder River Basin in Wyoming. About 10 percent of natural gas in the US now comes from coal bed methane.

Australia is developing large resources of coal bed methane, particularly in the coal-rich states of Queensland and New South Wales. Origin Energy, parent company of New Zealand’s Contact Energy, is one of a number of Australian firms developing this resource. Origin – which is the operator of the Kupe gas field now under construction off south Taranaki – announced recently that it is to build a 600MW power station west of Brisbane, which will use coal bed methane.

Global coalbed methane resources are estimated to sit at more than 30 trillion cubic metres and may be many times higher. Russia, already rich in conventional natural gas reserves, has the world’s largest coal bed methane reserves, followed by Canada and China.