Abstract As conventional gas supplies decline, unconventional sources of gas, like coalbed methane (CBM), will become increasingly important in Canada. Canada has over 700 Tcf of CBM gas resource in place, comparable to the U.S. resource. Canada now has the world's largest "dry" coal play and it is estimated (as shown below) that CBM will grow to 2 - 3 Bcf/d in production over the next 10 – 20 years and lead to recovery of up to 75 Tcf of gas. Since 2000, increased drilling activity has led to over 3,000 CBM wells and 150 MMcf/d of CBM production in Canada today, with both estimated to grow substantially in 2005 and beyond. CBM will become an increasingly important part of Canada's gas supply. Introduction Coalbed methane (CBM) is simply the natural gas that is generated by coal seams during the coalification process. It is "sweet gas" (not sour), is largely comprised of methane (>90%), and is similar to the natural gas that is burned in homes. In Alberta, the Department of Energy (DOE) refers to CBM as natural gas from coal, or NGC, to associate it with existing regulations which govern the production of natural gas. In British Columbia (BC), it is referred to by the Ministry of Energy and Mines (MEM) as coalbed gas, or CBG. Regardless of the name used, it is the same gas. CBM reservoirs are classified as "unconventional" and have gas storage and production mechanisms that distinguish them from conventional reservoirs. Most of the gas in coal is stored in a sorbed state within the coal matrix, physically attached to the complex internal surfaces of the coal as a function of pressure, characterized by sorption isotherms(1, 2). Coals which are suitable for CBM production are naturally fractured, with closely spaced natural fractures, or "cleats," which provide pathways for gas flow from the coal matrix. In many cases, but not all, these cleats are initially full of water, which must be produced to reduce the pressure around the coal matrix allowing the sorbed gas to desorb and become free gas which can then be produced. The gas storage and production mechanisms of coals are comprehensively covered in References (1) and (2) and elsewhere in the oil and gas literature. In Canada, commercial production of CBM has only recently begun. The objective of this paper is to provide a summary of the major coal groups being targeted for development in Canada and an update on the recent evaluation and development. Predictions of future performance will also be presented. CBM History in the U.S. Commercial development of CBM began in the U.S. in the 1980s. Initial efforts to remove the gas from coals were funded by the U.S. Bureau of Mines primarily to improve mine safety. As natural gas value increased, the research began to focus on capturing the CBM for commercial use, and hundreds of millions of dollars were dedicated to research and development projects by the U.S. DOE, the Gas Research Institute (GRI), and the industry(3–7).