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Coalbed methane in Wales

World Coal,

In 2008, Eden Energy explored a 230 km2 block in Wales and declared that there may be enough coalbed methane (CBM) to meet 5% of the whole of the UK’s energy need for a year. Working with two British companies, Eden said there may be four or five more blocks in Wales alone that could provide a similar amount of energy.

UK politicians welcomed the announcement, as Greg Solomon, executive chairman of Eden Energy, said that Wales was “sitting on a major resource of methane at a time when prices for this commodity have never been higher. There is a significant quantity of energy that could be trapped here.”

Resource Investment Strategy Consultants (RISC) reported that estimated gross contingent resources of CBM contained in the 10 petroleum exploration and development licenses (PEDLs) in South Wales that Eden Energy holds an interest in were a 1C – 3C range of 687-1,363 billion ft3 with a 2C estimate of 980 billion ft3.

RISC compiled these resource estimates based on the SPE PRMS definitions and guidelines. In doing so, the coal resources in all areas were estimated after adjusting for urban, mined out and restricted access areas. In South Wales:

  • Data from numerous wells and coal mining activities were used.
  • Contingent resources were assigned to areas with demonstrated gas content and data to support significant quantities of potentially moveable hydrocarbons from wells, mining and gas production from former coal mine activities.
  • Prospective resources were assigned to the other areas.
  • Coal depth ranges from near surface to 1200 m averaging about 600 m
  • The coals sub-crop towards the south and are absent in three PEDLs (216,217 and 218).
  • Data shows gas contents averaging 11.9 m3/t DAF over the permits, increasing to over 20m3/t towards the north.
  • Total coal thickness from well data averages 20 m.
  • Ash and moisture average 7% and 1% respectively.

Following Eden Energy’s announcement, politicians were quick to explore the potential of CBM further. In 2010, a British Geological Survey (BGS) study was commissioned by the Department of Energy and Climate Change (DECC) to explore the CBM potential of sites across the UK. The BGS mapped the location of CBM wells in the UK and noted the areas that may be of interest for future development (principally in central Scotland, north Staffordshire, Cheshire, Humberside, and South Wales).

It was estimated that the UK has total onshore CBM resources of 2900 billion m3. Even with a yield of 10%, the potentially recoverable resources of CBM (at 290 billion m3) would be larger than those of shale gas, although, this volume is also small when compared with conventional resources, such as coal.

For CBM, several companies are at the pilot production stage, for example Tower Colliery in South Wales, but large-scale production in the UK is unlikely before 2016.

CBM licensing and regulation

A 2012 report by the National Assembly of Wales, Shale Gas and Coalbed Methane, explained that, because unconventional gas exploration is not devolved to the regional government, licensing is administered by the DECC.

There are three stages to CBM exploitation within the UK:

  1. Exploration/test drilling.
  2. Pilot production wells.
  3. Full-scale production.

The DECC issues Petroleum Exploration and Development Licences (PEDLs) to operators, giving them exclusive rights to prospect for all petroleum types in a licensed area.

Licences to exploit gas are provided by the Crown as mineral rights are owned by the Crown rather than the landowner. However, PEDLs do not give immediate consent for drilling an exploration well or any other operation.

CBM operations constiture a ‘mining operation’ for the purposes of the Town and Country Planning Act 1990; therefore, a CBM operator must negotiate access with landowners; seek permission from the Coal Authority if operations will penetrate coal seams; and also seek local planning permission from the relevant Minerals Planning Authority (MPA), which in Wales is the relevant Unitary Authority or National Park Authority.

CBM has been regarded as an anomaly in planning terms. Although it is often considered in the context of minerals planning policy, CBM recovery uses techniques derived from oil and gas exploration, rather than the usual quarrying or mining of aggregates and coal. As a result, minerals planning authorities are obliged to formulate their position on CBM using policies that are not necessarily fit for purpose.

Welsh MPs use precautionary approach

Welsh Ministers have the power to call-in any of these planning applications in order to determine them. The First Minister has also stated that in relation to planning applications for unconventional gas exploration, the Welsh Government would encourage a precautionary approach. The planning applications for development of CBM in South Wales are currently for the exploration phase only.

Further CBM testing in Wales

Coastail Oil and Gas Ltd has already carried out test drillings for CBM at sites in Aberavon, Llangeinor and Pencoed, using a license awarded in a previous licensing round.

Test drilling has been completed in the Llynfi Valley and at two other sites near Port Talbort.

While the majority of potential CBM sites in Wales are located in the south of the country, prospective wells have been identified in the north. In mid September 2013, GP Energy Ltd applied to Wrexham Council for a CBM exploration license on farmland off Borras Road, Commonwood, between Gresford and Holt. In 2008, a DECC license was also granted for CBM exploration in the Wrexham area to Greenpark Energy.

Unique UK requirements

Solomon said that, because many of the CBM license areas in south Wales hose several large industrial plants, including a steel works, and insulation manufacturer, a paper mill and a major industrial estate, the infrastructure situation and project economics are quite different from the typical CBM projects found in Australia.

Consultancy firm RPS said CBM developments in Wales would “utilise many wells, pipelines and other facilities.”

Jo Ekanayke and Iain Hardie, from the International Law Office, said that, compared with the more advanced markets of the US, Canada and Australia, the Welsh CBM industry “was in its infancy.” As a consequence, there remains a degree of uncertainty as to the interpretation and implementation of the various layers of policy and regulation at local and national level. 

Written by Sam Dodson

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