The wheels have already fallen off the US Coalbed Methane band wagon

The coalition government wants to start a US Style unconventional gas revolution in the UK including Somerset where Coalbed Methane (CBM) is currently the prime form of unconventional gas being evaluated. Before embarking on a similar US style CBM band wagon it is probably worth taking a closer look at how the US Coalbed Methane Industry is performing. The US Environmental Protection Agency (EPA) has undertaken a series of studies on CBM which make interesting reading.

EPA report that according to the Energy Information Administration that US wellhead gas prices fell from an all time high of $7.97 per Mcf (1,000 cubic feet) in 2008 to $ 3.67 in 2009 and that this fall was a combination of both the increase in shale gas production but also in the economic crisis that started in 2008 resulting in a simultaneous over supply and a decline in demand. From here on it is estimated that prices over the coming decades are only going one way and that is up.

US Natural Gas  Prices and Projection

US Natural Gas Prices and Projection, Source EPA

How has CBM gas production compared with shale gas during this period? Whilst shale gas production has increased dramatically CBM production isn’t keeping up and is actually declining. So what is going on?

US Gas Production

US Gas Production, Source EPA

The EPA’s motivation for this research was to investigate the impact on the CBM industry of additional environmental controls on wastewater processing and disposal and how additional costs to protect the environment would impact the industry. Note that for CBM the wastewater is from dewatering the coal seams to get the gas flowing in addition to any water used for hydraulic fracturing. In the USA companies can use a range of methods to get rid of wastewater from full processing to direct discharge of untreated water into surface water courses and underground injection (which would not be allowed in the UK – or will the Infrastructure Bill allow it?).

From their analysis the EPA found that independent of further environmental controls that:

“a large fraction of existing CBM projects are no longer economically viable”


“EPA estimated that approximately 25 percent of existing CBM projects either closed immediately in 2008 or were non-operational by 2010. EPA expects that an additional 43 percent of the existing CBM projects reported in 2008 were shut down by 2012.”

So they are saying that 68% of the US CBM projects were shut down by 2012! No wonder CBM gas production is not keeping up with shale gas. For existing projects EPA say:

“Overall, EPA found that applying wastewater discharge requirements would impose significant burdens in terms of immediate or early shutdown and loss of gas production from the projects that remained economically viable at 2008 and 2010. “

They go on to say that most new projects may be “delayed by at least 30 years” (by which time we are supposed to have decarbonised our energy sector). This is without even cleaning up the water discharge regime which would further delay the viability of new projects. So EPA isn’t going to impose any further wastewater regulations because it would basically close down development of the CBM industry.

But if CBM companies are going out of business then what happens to the gas wells?  It turns out that they may get bought up and fostered by other companies who don’t have to bother with the development costs or they may be simply “orphaned”.

Coalbed methane bust leaves thousands of orphaned gaswells in Wyoming 

Aftermath of a drilling boom: Wyoming stuck with orphaned gaswells

Orphan wells

Wyoming effort to plug orphaned coalbed methane gas wells ahead of schedule

Orphaned wells are not just a US phenomenon, of the 2,000 odd oil and gas wells ever drilled in the UK the ownership of 53% is unclear and between 50 and 100 are thought to be orphaned – Davies et al. 2014

GeoMet Inc – where next?

What happened to the company GeoMet Inc who evaluated the Bristol-Somerset coalfield back in the 1990s? Their 2011 report to the US Securities and Exchange Commission gives a brutally honest assessment of the industry including 10 pages of Risk Factors that might affect their business including regulation relating to global warming, indebtedness, uncertainties in estimating gas reserves, finding new areas to develop, environmental regulation, water disposal costs,  detrimental impacts of climate change and uninsurable losses.

In May 2014 GeoMet Inc sold “substantially all of its remaining assets”.

So much for the US CBM revolution. Do we want to start one in Somerset?

Read the page about GeoMet’s CBM exploration in Somerset here and our annotated copy of their PEDL relinquishment report for Somerset here:


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