Australian Pipeline Industry Association 2007 Convention

COAL SEAM METHANE DEVELOPMENT

James Czornohalan Project Manager Fyfe Pty Ltd

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Introduction

Coal Seam Methane (CSM) development is a fast growing source of natural gas reserves, with production in Queensland alone in 2005/2006 topping 60PJ, compared with 10PJ in 2000/2001, and is expected to be in the order of 339 PJ by 2029/301 . Growth in CSM is currently being driven by the large potential reserves, the good proximity of these reserves to market, and the lower greenhouse gas emissions associated with this type of gas production. The purpose of this paper is to outline the current state of coal seam methane (CSM) development in Australia, and to outline some of the technical details involved in its production. In particular, this paper will focus on: Development of Coal Seam Methane Fields Comparison of CSM production to traditional gas production Technical Challenges in CSM production and development

What is Coal Seam Methane?

Coal seam methane goes by a few different titles; coal seam gas, coal bed gas and coal bed methane are other terms in current usage. Coal seam methane is a form of natural gas that is trapped in the micropores of a coal seam, and is formed within the coal as a result of the process of peat turning into coal. CSM collects on the coal seam by bonding to the surface of the coal particles, and forms a thin film that is generally held in place by water. The hydrostatic pressure of the water keeps the methane adsorbed in the coal. Water fills the fractures or cleats in the coal seam and it is the interconnection of these that determines how well a coal seam will produce methane.

Figure 1 Coal bed Matrix illustrating gas surrounding the coal bed by water and rock

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A Brief History of Coal Seam Methane in Australia 2

Its It is easy to think of Coal Seem Methane as a new thing in Australia, but it has had usage in Australia for some 60 years. The Sydney Harbour colliery, located underneath the harbour, operated as a coal mine between 1902 and 1931. After the mines closure in 1932, the Natural Gas and Oil Corporation drilled a gas exploration well below the base of the Birthday shaft, which is some 895m deep, to a total depth of 1504m. Almost pure methane was struck at a depth of 1,273m, before the gas producing bed was accidentally cemented over. After some unsuccessful stimulation operations, the well was eventually suspended. During 1943 and 1944, the headings to the Sydney Harbour colliery were sealed, and the well was connected to the abandoned mine through the pipes and mine workings. This effectively turned the mine into a gigantic cavity completion, and coal seam gas was produced from the well from 1944, when annual production peaked at approximately 12 TJ, until 1949 when the Natural Gas and Oil Corporation went into liquidation. The well produced approximately 21 TJ of gas over its life, some of which was used by Dairy Farmers Cooperative to power their trucks. Modern coal seam gas exploration as we currently know it began in the Bowen Basin in 1976 when Houston Oil and Minerals drilled Carra-1 and Kinma-1. BHP petroleum were active in CSM exploration in the early 1980s and armed with experience from the US, North American petroleum companies became major players in the late 1980s and early 1990s. Ironically, production did not really take off until the late 1990s, by which time most of these companies had withdrawn.

Current State of Coal Seam Methane Development in Australia

The overwhelming majority of the CSM reserves in Australia are held in the black coal deposits of Queensland and New South Wales, with the majority of this in Eastern Queensland. The graph overleaf shows the total natural gas produced in Australia and shows the proportion of this that is now represented by CSM3.

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Coal Seam Gas Production

1600 46 1400 18 24 35 42

67

1200 Annual Production (PJ)

1000

800 1199 1219 1257 1263

1411

1480

600

400

200

0 2000-01 2001-02 2002-03 Year Traditional Production (PJ) CSM Production (PJ) 2003-04 2004-05 2005-06

Figure 2 Chart showing Gas Production in Australia While the proportion is still small, it is growing, and by the end of FY2007-08, CSM is expected to make up some 10% of the total natural gas in Australia. The vast majority of the Coal Seam Gas Reserves in Australia are in New South Wales and Queensland, and the map below shows the location of these basins.

Figure 3 Major Gas Fields in Eastern Australia

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The best resources in Australia are the black coals of the Bowen, Surat and Sydney Basins, home to the large CSM producing projects such as Fairview, Scotia, Mooranbah, Tipton West and Spring Gulley. The Cooper Basin is also a large coal resource, however the coal is too deep to develop, and also develop CSM from. This is because due to the large depth, the pressure closes off the cleats in the microstructure and prevents

Production of Coal Seam Methane

The production of coal seam methane in the field is somewhat different from conventional on shore gas production. Traditional gas wells produce their highest flow rates at the beginning of the wells life, and do not generally start producing water until later when pressure in the reservoir and gas production declines. The chart below illustrates the production profile of a typical on shore gas well.

Gas

Flow Water

Time Figure 4 Production Profile of a traditional gas well5 The life of a coal seam methane well generally consists of 3 stages: Drilling Water removal Annular gas production Coal seam gas differs because a significant quantity of water needs to be pumped off before the well can produce gas and the well will produce at its maximum rate in the middle of its life as illustrated by the following typical CSM well production profile.

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Stage 1 Dewatering

Stage 2 Mid Life

Stage 3 Decline Production

Flow

Water

Gas

Time Figure 5 Production profile of CSM well5 Coal seam Methane is generally clean and of a high quality, containing over 95% methane and only small quantities of other gases such as carbon dioxide, ethane, higher hydrocarbons, nitrogen and other inert gasses4. This means that the gas only requires minimal processing, in the form of compression and dehydration, before it is sent to market. This is as opposed to traditional gas production, which generally requires the removal of carbon dioxide, other hydrocarbons and in some cases hydrogen sulphide. This low CO2 content, along with the fact that coal seam methane can be used and sent to market, rather than just flared as has traditionally happened with coal mines, makes the production of CSM a greenhouse friendly form of energy.

6
6.1

Coal Seam Methane Facilities

Lease Facilities

The main engineering challenge in the production of CSM is the large quantity of water produced from each well. This water must be initially produced in large quantities before the well will produce gas, which generally requires some kind of down hole pumping. It then must be disposed of, which can present a challenge, because in most cases this water contains contaminants and is not fit to be put to ground.

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wat er

gas cem t en an d cas g in

gas

water

gas

coal

pu p m

Figure 6 Typical CSM downhole schematic Some fields are now installing reverse osmosis or similar water treatment plants, where clean water is used locally, and waste brine is reinjected back into the reservoir.r.

Figure 6 Typical CSM downhole schematic During the wells life as a gas producer, water must also be separated out from the gas stream, and this is often done on the lease using a horizontal separators, as shown below.

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6.2

Pipelines

One of the key differences between traditional gas production and coal seam gas production is the range of pressures being dealt with. Gas wells in the Cooper Basin, for example generally have reservoir pressures of between 15 and 25 MPag. Pressures in this gathering system range between about 1500 kPag in the depleted inner fields, to around 8,000 kPag in less depleted outer fields. Coal seam gas fields operate at much lower pressures, with typical reservoir pressures the Fairview field of around 5000 kPag, and gathering system pressures in the range of 500 kPag. Due to the amount of water that is often associated with coal seam methane, internal corrosion can be an issue. This, combined with lower pipeline pressures, facilitates the use of alternative pipeline materials rather than steel, the two most popular of these being high density polyethylene (HDPE) and glass reinforced epoxy (GRE) pipelines. HDPE pipe is both cost effective and fast to install, which is often important during the development of a CSM field with several wells. HDPE is also a mature technology, being well used in the domestic gas market GRE pipelines are manufactured using an epoxy substrate, usually based on anhydride, aliphatic amine or aromatic amine, depending on what temperature rating is required. It is then filament wound with glass fibre to provide strength. It is available in a range of jointing systems, covering various threaded and glued joints. While GRE pipelines are generally used in low pressure service, on advantage that GRE has is that it is also available in high pressure ratings, so it can be used both up and downstream of compressors.

Development of a CSM fields

Unlike traditional gas fields, where reservoirs are usually exploited using a small number of wells, and projects are evaluated on a well by well basis, CSM fields are often developed in large campaigns of several wells and so gathering networks are required to be built from the ground up. Computational flow programs such as fluid flow are used to calculate the optimum size and layout of pipeline networks for both water and gas. This is then used as the basis for the field survey, which often makes changes to pipe routes to take into account geographical and environmental considerations. Often, there is a requirement to bring large numbers of wells online within a short period. This presents special engineering challenges, and is achieved by standardizing designs of lease installations, pipeline tie ins and manifolds, and using pre fabrication to allow the network to be assembled as quickly as possible.

Summary

Coal seam methane has been in use in Australia for a long time, with a small project in Sydney in the 1940s. It wasnt until the late 1990s however that CSM production Page 8 of 9

really took off in Australia. Current production is in the order of 60 PJ/ annum, and is expected to reach 339 PJ by 2030. Coal seam methane production differs from traditional gas production in that it operates at much lower pressures and requires much less processing. However large volumes of water are produced as a by product, and disposal of this water can present an engineering challenge.

References
1. 2. 3. 4. 5. Australian Energy National and State Projections to 2029-30, Clara Cuevas-Cubria and Damian Riwoe, ABARE 2006 Coal Seam Gas Exploration, Development and Resources in Australia: A National Perspective S. Miyazaki, Geoscience Australia, APPEA Journal 2005, pp131 132 ABARE, Energy Statistics Australian Energy; Geoscience Australia Oil and Gas Resources of Australia Eastern Australias Gas Supply and Demand Balance A. Dickson and K. Noble, ABARE, APPEA Journal 2003 p141. Coal Seam Methane Lunch and Learn Presentation, Steve Taylor, Principal Geologist CSM, Santos Ltd, 27 July 2005

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