Economic and Reserve Evaluation of Coalbed Methane Reservoirs

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Summary This paper presents examples of a reservoir-simulation-based technique for evaluating coalbed methane reserves. Simulation results and an economic analysis model that incorporates the effects of nonconventional fuel tax credits are used to compute economics. A statistical model quantifies economic risk on the basis of uncertainty in relevant geologic properties. Introduction The purpose of this paper is to discuss a methodology for the estimation and classification of reserves from coalbed methane reservoirs and to present a technique for determining the 'economic feasibility of proposed coalbed methane investments. Coalbed methane reservoirs are characterized by the nonconventional nature of gas storage and fluid production, which limits the use of traditional decline curve or volumetric methods for reserve estimations. To account accurately for the physical phenomena affecting production, an approach based on the use of reservoir simulators is recommended. Applications of this approach for different reserve categories are presented. Production from coalbed methane reservoirs is affected by several reservoir and geologic factors. Some of these factors can be determined with standard formation evaluation methods; others must be inferred by production analysis. The use of production history matching as a reservoir analysis tool is illustrated. Natural gas production from coalbed methane reservoirs in the U.S. qualifies for a nonconventional fuel tax credit under Sec. 29 of the Internal Revenue Code (lRC). If these credits can be utilized, the positive effects on project economics are quite significant. These effects are demonstrated by various examples. Reservoir-property estimates and production forecasts are subject to a certain level of uncertainty. It is important to recognize the effects of these uncertainties on the predicted economic returns from a project. A unique approach to quantifying the geologic risks associated with coalbed methane projects is presented.