(EnergyAsia, October 7 2011, Friday) — A study led by Norway’s DNV has concluded that coalbed methane (CBM) could become as important an energy source for Asia and Australia, as shale gas has for North America.

To achieve its potential, the CBM industry must overcome critical commercial, technical and regulatory challenges by implementing reliable verification, comprehensive performance monitoring, specific environmental and risk mitigation systems.

CBM gas is kept locked up in coal seams by hydrostatic pressure. Because of its large surface, coal can store seven times more gas than conventional methane reservoirs of equal rock volume. To release and extract CBM, large volumes of water have to be removed.

Similar to shale gas extraction, fracturing is sometimes necessary. CBM is further characterised by high number of wells, more shallow drilling and low-pressure extraction.

The study found that almost 40 % of the world’s 2,800 trillion cubic feet of CBM reserves — three times the size of Qatar’s natural gas reserves — are located in China, Australia, India and Indonesia.

“With Australia leading the industrial development of CBM and with promising growth emerging in Asia, efficient measures to reduce project costs while preserving the environment are necessary,” said DNV.

Hans Kristian Danielsen, Head of DNV Cleaner Energy in Australia, said:

“DNV is engaged in several mega LNG projects in Australia including CBM projects. In CBM-based LNG developments, we see gaps between competencies in project development practices of onshore contractors newly involved in CBM and the requirements of owners of mega LNG developments. DNV sees an opportunity to reduce project construction risks by establishing and aligning best practices through third party monitoring of project performance.”

Jens Petter Tronskar, chief technology officer of DNV Clean Technology Centre in Singapore, said:

“The study mapped out CBM-based LNG project developments and opportunities in Asia and Australia with a focus on safety and environmental considerations that are different from conventional gas project. The project identified the challenges and risk drivers that CBM companies face and also how DNV can help companies overcome these risks.

“Companies which address and mitigate project risks at an early stage are well positioned to reduce the probabilities for budget and schedule overruns.”

The study concluded that CBM project performance can be improved through increased support from third party companies on validating project life cycle cost calculations. Such validation would address both technical, safety and commercial matters. Third parties should validate concept evaluation of upstream CBM well facilities, downstream gas processing and export pipeline. Third party verification of CBM engineering designs, pipeline reliability and maintainability should be undertaken.

More effective and robust regulatory frameworks on environmental, social and economic aspects of CBM are needed in many countries in order to speed a safe and economical sound scaling of CBM projects.

Bjorn Tore Markusen, managing director of DNV’s Clean Technology Centre in Singapore, said:

“DNV is now equipped to provide risk management services spanning from establishing regulatory frameworks and standards to on-site verification to the evolving CBM industry in Asia and Oceania, leveraging on our well established best practises from the conventional Offshore and Onshore Energy Industry.”