Coalbed methane sector to be worth $5.3 billion by the end of 2013

The global coalbed methane market (CBM) market has been forecast to reach a total value of approximately $5.3 billion by the end of 2013.

Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in the United States, Canada, and other countries.

The less well known unconventional gas, CBM - from a cost and expertise perspective - is more than ready to take advantage of very strong natural gas prices in India and across East and South East Asia.

Coalbed methane is distinct from typical sandstone or other conventional gas reservoir, as the methane is stored within the coal by a process called adsorption. The methane is in a near-liquid state, lining the inside of pores within the coal (called the matrix). The open fractures in the coal (called the cleats) can also contain free gas or can be saturated with water.

Major factors driving the CBM market include focus towards decreasing the reliance on conventional gas sources and potential for green house gases mitigation. CBM is a pure form of natural gas and provides opportunities for producers to earn carbon credits. However, it is a long and capital intensive process and the long durations taken for dewatering are the major factors which are acting as the major barrier to the global market.

Australia, as the second CBM market established in the world, has a head start on the Chinese, Indian and Indonesian development. Capital expenditure on CBM in Australia is already very high to support the three CBM-LNG export projects under construction on the Queensland coast.

In China, the government is aiming to double the percentage of its primary energy supply that is natural gas. To do this will require action on all possible fronts; and, with difficulties developing shale assets, the Chinese are looking to their very significant CBM reserves to contribute substantially to their domestic gas production.

However the State will need to support the industry with a range of subsidies if the output targets set for CBM are to be met. This will require capital expenditure to increase rapidly over the coming 10 years.

For more information on the coalbed methane industry, see the latest research: Coalbed Methane Industry

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