Wish I knew how to get a handle on the economics of coal bed methane. CEO of IOC claims that a typical Australian coal gas LNG project will need 4000 wells - vs IOC's 4 to 5 wells. Guy must be exaggerating, as if estimate below of $1 million to $2 millionn per well is correct, that would be $4 to $8 billion just for the wells. And does this $1 million include all the piping and dewatering infrastructure?
The Good Oil - AP-LNG – an update from COP 11 pages, 14 figures,
Our US energy team recently held a call with the President of COP Australia to discuss the AP-LNG (Asia Pacific LNG) project. COP has discussed some key issues related to CSG LNG (Coal Seam Gas to Liquid Natural Gas), which we believe apply to the rest of the CSG LNG projects.
CSG is low calorific content, and COP suggests that dry CSG runs at around 900btu per cubic foot. We believe this is the first time a major CSG JV has publicly acknowledged the pricing issue. We feel comfortable with our current assumption for CSG LNG, which is to take an additional 10% discount to our usual assumption for LNG prices at 15% discount to oil price parity.
COP suggests that capex is currently around $1-2mn per well, with recent drilling around the upper end of the range. We understand that some of the JV’s with relatively higher overheads are drilling wells at roughly $2mn per well in the Surat. We would also expect that the reduction in costs will be limited given that some regions in the Surat have been drilled and in production for a number of years.
Another CBM play - a value play that promises 10-20 times
current market cap. A small canadian company TCF operating in Indonesia may have close to 3 TCF of CBM gas. They hit paydirt with first well - aprox 90 feet of CBM and waiting for well analysis within 5-10 days. They are planning a pilot by next year and infrastucture is nearby.
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