FOR 40 years natural gas companies have been drilling wells -
18,000 of them - in New Mexico's San Juan Basin.
For all those years and all those wells they drilled right
through 3,000-foot-deep coal seams that contained methane, the main
constituent of natural gas, to get at conventional gas-bearing
Now gas men are working those coal seams, thanks to a hefty tax
credit that Washington will give those who move fast to develop coal
seam gas. Wells have to be drilled by this year to qualify.
"This is a tremendous resource. It's only now dawning on the
industry and the financial analysts how significant it is," says
Warfield Hobbs IV of Ammonite Resources, a geological consulting
firm in New Canaan, Conn.
Because development of this resource is new, evaluating its size
is difficult. The industry generally accepts 90 trillion cubic feet
(TCF) as an estimate of recoverable gas. But that's thought to be
very conservative and doesn't include methane in several large coal
basins. Even so, it already equals almost 60 percent of the proven
conventional gas reserves of 157 TCF in the United States.
"Here is a resource that was considered unconventional 10 years
ago," says Bob Kalisch, the director of gas supply and statistics
for the American Gas Association (AGA). "Something big is happening
in the gas industry."
This "something big" involves a lot of money. Mr. Hobbs
calculates natural gas companies will spend well over $1 billion
this year to drill 4,700 coal-bed methane wells. By year's end,
7,000 wells will be in place, located either in the San Juan Basin
or Alabama's Black Warrior Basin, where the coal yields high volumes
of gas and pipelines have already been built.
By the end of 1991, Hobbs expects total production from these
wells to produce 1 TCF a year - 6 percent of annual US natural gas
consumption of 18 TCF.
"With the deliverability of other gas supplies declining,
coal-bed methane is going to play an important role in meeting any
increases in demand over the long haul," says David Newman, vice
president of Amoco Production Company in Denver.
All this from a gas that at best used to be considered waste, at
Ever since coal started to be mined, likely by monks near
Newcastle-upon-Tyne in 13th-century England, coal-bed methane has
caused mine explosions.
Methane molecules bonded to the coal while it was forming
millions of years ago. Water held them in place. Removing the water
to mine the coal releases the poisonous gas.
Initially, drilling for coal-bed methane aimed only at improving
mine safety, and the gas was simply vented into the atmosphere. But
Amoco realized it could be commercial and sank its first coal-bed
methane well in New Mexico in 1977.
Two years later, as it battled the energy crisis, Congress
introduced a tax credit to subsidize development of nonconventional
energy sources. …