DEPARTMENT OF ENERGY AND MINERAL ENGINEERING

PENN STATE UNIVERSITY

Coalbed Methane: Recovery &

Utilization in North Western San
Juan, Colorado
EME 580 : Integrative Design
EGHONGHON OJEIFO
KELVIN ABAA
MEGAN ORSULAK
PHANI KIRAN PAMIDIMUKKALA
SARMISHTHA SIRCAR
SHASHANK SHARMA
TUSHAR VATSA
Contents
LIST OF FIGURES ...................................................................................................................................... 5
LIST OF TABLES ........................................................................................................................................ 7

CHAPTER 1: Literature Review

1. METHODS OF METHANE EXTRACTION FROM COAL.......................................................................... 9
1.1 Methane Drainage from Coal Mines ......................................................................................... 9
2. METHANE FROM COAL BED RESERVOIRS ....................................................................................... 10
2.2 Gas Content Determination.................................................................................................... 11
2.4.1 Production Decline Curve ............................................................................................... 12
2.4.2 Pressure Transient Analysis ............................................................................................ 12
3. PRODUCTION ENHANCEMENT AND STIMULATION ........................................................................ 13
4. METHANE TREATMENT .................................................................................................................. 14
5. WATER MANAGEMENT .................................................................................................................. 14
7. ENVIRONMENTAL ISSUES IN COAL BED METHANE ......................................................................... 21
8. ECONOMIC FACTORS IN THE DEVELOPMENT OF COAL BED METHANE RESERVOIRS ....................... 24

CHAPTER 2: Engineering Design

1. Selection of Location...................................................................................................................... 26
2. Reservoir Simulation ...................................................................................................................... 26
3. Overview of Stimulation and Enhancement ................................................................................... 29
3.1 Enhancement ......................................................................................................................... 29
4. Overview of Gas Treatment ........................................................................................................... 30
5. WATER PRODUCTION AND DISPOSAL ............................................................................................ 31
5.1.1 Concerns and Issues of Produced Water Disposal In San Juan Basin .................................... 32
5.2.1 Project Benefits: ................................................................................................................... 32
5.3.1 Water Production Rates From Methane Wells:..................................................................... 33
5.3.2 Water Decline Rates And Estimates From Model: ................................................................. 33
5.3.3 Chemical Content: ................................................................................................................ 34
5.6.1 Underground Injection: ........................................................................................................ 35
5.6.2 Well Classification: ............................................................................................................... 36
5.6.3 Factors Affecting Deep Injection: .......................................................................................... 36
5.6.4 Alternative Injection Methods ............................................................................................... 37
 5.7.1 Key Economic Factors: ......................................................................................................... 37
5.7.2 Water Disposal Alternatives: ............................................................................................... 37
5.7.3 Capital And Operating Costs Of Actively Treated Water: ..................................................... 38
5.7.4 Transport Costs of Actively Treated Water: ......................................................................... 39
5.7.5 Cost Analysis for Deep Injection: .......................................................................................... 39
5.7.6 Cost Summary: ..................................................................................................................... 40
6. NATURAL GAS DISTRIBUTION: ........................................................................................................... 40
6.1 Overview of Colorado’s Resources: ............................................................................................. 40
6.2 Natural Gas Consumption Trends in Colorado: ............................................................................ 40
6.3 Destinations for Natural Gas from the North Western San Juan Basin .................................... 40
6.3.1 Interstate Pipelines: ............................................................................................................. 40
6.3.2 Local Distribution Companies: .............................................................................................. 41
6.3.3 Market Centers/Hubs ..................................................................................................... 42
6.3.4 Storage Sites................................................................................................................... 43
6.4 Treatment Plants.................................................................................................................... 44
6.5 Natural Gas Fired Power Plants .............................................................................................. 44
6.5.1 Why Natural Gas Fired Plants ......................................................................................... 44
6.5.2 Natural Gas Fired Plants in Colorado............................................................................... 45
6.6 Compressed Natural Gas Stations........................................................................................... 45
6.7 Deciding Potential Customers ................................................................................................ 45
6.8 Pipeline Delivery .................................................................................................................... 46
6.11 Pipeline Safety and Regulations.............................................................................................. 49
6.12 Future Work ........................................................................................................................... 49
7. ENVIRONMENTAL ISSUES:.............................................................................................................. 51
8. RULES AND REGULATIONS: ............................................................................................................ 55
8.1 DRILLING, DEVELOPMENT & COMPLETION: ................................................................................. 55
SAFETY REGULATIONS ....................................................................................................................... 56
9. ECONOMIC ANALYSIS..................................................................................................................... 58
9.1 Exploration Costs: ....................................................................................................................... 58
9.2 Drilling, Completion & Fracturing Costs: ...................................................................................... 58
9.3 Lease Costs: ................................................................................................................................ 58
9.4 Administrative Costs: .................................................................................................................. 58
 9.5 Equipment Costs: ........................................................................................................................ 58
9.6 Operating Costs: ......................................................................................................................... 58
9.7 Transportation Costs: .................................................................................................................. 58
9.8 Royalty Costs: ............................................................................................................................. 59
9.9 Gas Price: .................................................................................................................................... 59
9.10 Revenue Costs: ......................................................................................................................... 59
9.11 Total Capital Investment & Gross Revenue: ............................................................................... 59
9.12 Sensitivity Analysis: ................................................................................................................... 59
REFERENCES .......................................................................................................................................... 62
LIST OF FIGURES

Figure 1. Dual Porosity System (84) ............................................................................................ 68

Figure 2. Sorption Isotherm-shows gas content versus pressure at constant temperature. (85) ...... 68
Figure 3. Production Decline Analysis for a Typical Reservoir. ................................................. 69
Figure 4. Response of Pressure versus Time for a Typical Dual Porosity Reservoir. .................. 69
Figure 5. Hydraulic Fracturing Schematic. ................................................................................ 70
Figure 6. Natural Processing Schematic..................................................................................... 71
Figure 7. Shown below in the First Picture are the Boundaries of the San Juan Basin in Colorado
and in New Mexico. While below is an Enlarged Portion of the Basin in Colorado with
the Selected Area Highlighted in Area E. .................................................................... 72
Figure 8. Shows the Five Spot Drilling Pattern for Producer Wells. ........................................... 73
Figure 9. Shows Daily Gas and Water Production for Each Well. .............................................. 74
Figure 10. Shows Cumulative Gas and Water Production for 13 Wells. ..................................... 75
Figure 11. Showing the Impact of Interference from Other Wells. ............................................. 76
Figure 12. Block Pressure for each Well for Ten Years ............................................................. 77
Figure 13. Fracture Pressure and Rate of Injection for San Juan Basin. ...................................... 78
Figure 14. Well Distribution and Permeability Change after Fracturing. .................................... 79
Figure 15. Gas Rate for 10 Wells in 10 years. ............................................................................ 80
Figure 16. Cumulative Gas Production for 10 Wells in 10 years. ............................................... 81
Figure 17. Cumulative Water Production for 10 Wells in 10 years............................................. 82
Figure 18. Water Rate for 10 Wells in 10 years. ........................................................................ 83
Figure 19. Water Production from Simulated Area. ................................................................... 84
Figure 20. Water Production from a Single Well in Simulated Area. ......................................... 84
Figure 21. Exponential Decline of Water in a Single Well. ........................................................ 85
Figure 22. Simplified Flow Diagram for Produced Water Treatment. ........................................ 85
Figure 23. Natural gas market centers or hubs with respect to natural gas transportation corridors.
................................................................................................................................................. 86
Figure 24. Location of Hubs in Rocky Mountain Region. .......................................................... 87
Figure 25. Types of Underground Natural Gas Storage.............................................................. 87
Figure 26. Location of Underground Storage Sites in US. ......................................................... 88
Figure 27. Underground Storage Sites for Central Region. ........................................................ 88
Figure 28. Natural Gas Processing Plant Concentration in US. .................................................. 89
Figure 29. Location of Natural Gas Fired power plants (inverted orange triangles) and Market
centers (orange stars) in Colorado. ........................................................................... 90
Figure 30. Compressor Stations on the Interstate pipeline networks. .......................................... 90
Figure 31. An Ideal Natural Gas Distribution Network. ............................................................. 91
Figure 32. Development of Nanoporous Carbon Material from Corncob waste to Store Methane.
................................................................................................................................................. 91
LIST OF TABLES

Table 1. Summary of Methods for Recovering Methane from Non-mined areas and
Underground...............................................................................................................92
Table 2. Removing Contaminants. .............................................................................................92
Table 3. Water Production In Some Major Producing Coal-Bed-Methane Areas. (21) .................93
Table 4. Typical San Juan Basin CBM Produced Water Constituents and Concentrations. ........93
Table 5. The Six Most Popular Coalbed Methane Basins within the United States. ....................94
Table 6. San Juan Basin Reservoir Properties. ...........................................................................94
Table 7. Input Data for Numerical Simulation. .........................................................................95
Table 8. Thermodynamic Properties of the Components. ...........................................................95
Table 9. General Raw Natural Gas Component make-up. ..........................................................96
Table 10. Typical Water Production Rates in San Juan Basin. ...................................................96
Table 11. Water Production Rates from the Simulated Case Study. ...........................................96
Table 12. Chemical Composition of Coalbed Water. .................................................................97
Table 13. Water Requirements for Geothermal Energy Generation. ...........................................97
Table 14. Water Treatment Process System & Capital Costs for Active Water Treatment..........98
Table 15. Annual Operating Costs for Treating Water (For a 130-well unit). .............................98
Table 16. Estimated Transport Costs. ........................................................................................99
Table 17. Projected Transport Costs over a 10 year Operating Period. .......................................99
Table 18. Cost of Deep Injection of Produced Water. ................................................................99
Table 19. Total Cost for Management of Produced Water. ........................................................99
Table 20. Forecasted Gas Prices for next 10 Years.(83) .............................................................100
Table 21. Total gas production from wells for 10 years. ..........................................................100
Table 22. Sensitivity Analyses as per NPV. .............................................................................100
Table 23. Sensitivity Analyses as per % NPV Change. ............................................................102
INTRODUCTION:
Natural Gas is a vital component of the world's supply of energy. It is one of the cleanest, safest,
and most useful of all energy sources. It is a fossil fuel like coal and oil and a mixture of
combustible hydrocarbon gases with methane being the principal component (usually 70-90%).
Methane is a greenhouse gas with a global warming potential (GWP) over 100 years of 23. This
means that when averaged over 100 years each kilogram of methane warms the Earth 23 times as
much as the same mass of carbon dioxide (1). Harnessing this resource will not only help meet
the growing energy demands but also help reduce the problem of global warming.

According to the U.S. Energy Information Administration 2008 data, primary energy
consumption by source and sector for that year showed that contribution of natural gas to energy
consumption was nearly 24% of the total. Majority of this amount is reflected in the residential
and commercial sectors. However, over the past decade, a gap between demand and consumption
is evident; to fulfill a part of which, United States has been importing natural gas from countries
like Canada and New Mexico. However, to be self sufficient in its energy needs, U.S. is looking
towards others sources of natural gas like Tight gas, Shale gas, Coal Bed Methane, Landfill gas
etc. This project focusses on the development and utilization of Coal Bed Methane, an
unconventional source of natural gas.

Unconventional resources are resources that have low permeability and require advanced drilling
or stimulation technologies to be produced at commercial flow rates. The role of unconventional
gas in the future supply picture is made crucial by the fact that conventional gas basins (where
gas flows out naturally when a well is drilled) appear to be becoming increasingly supply
challenged. Coal Bed Methane is an unconventional source in which methane is trapped or
adsorbed in the coal surface. Today, Coal Bed Methane meets nearly 9% of the energy demands
and contributes more than 1.6 Tcf of gas production annually in United States (2). Some of the
major development in the extraction of this resource has taken place in basins like San Juan,
Powder River, Raton while exploratory work is still in progress in comparatively newer basins
like the Northern Appalachian.

This project will focus on the development of coal bed methane using appropriate drilling, water
disposal, enhancement, treatment and distribution methods while giving appropriate attention to
the environmental challenges and project feasibility issues. The focus of our study will be in the
North Western San Juan basin in Colorado. The details about the selection of area and the
production and distribution of the natural gas will be discussed in the following sections.
LITERATURE REVIEW:
1. METHODS OF METHANE EXTRACTION FROM COAL:

Coal is a type of rock that contains more than 50% by weight and 70% by volume of organic
materials consisting mainly of carbon, hydrogen and oxygen. Methane from coal can be
extracted in two ways. One is to extract methane from a mine when mining is in progress and the
second is to extract methane from a virgin coal seam or coal bed in which mining has not been
started.

1.1 Methane Drainage from Coal Mines:

Methane drainage is the process of removing the methane gas contained in the coal seam and
surrounding strata through pipelines. Control techniques for use in coal mines can be divided
into three categories: 1. Dilution ventilation, 2. Blocking or diverting gas flow in the coal bed by
means of seals, and 3. Removing relatively pure or diluted methane through boreholes. The
drained gas is mostly methane. In this study our focus is not on the mining aspect, but more so
on just removing methane from vertical coal bed methane wells.

1.1.1 Recovery Techniques for Methane in Coal Mines:

There are four main methods used for methane recovery. These are the vertical degas
system, vertical gob degas system, horizontal borehole degas system, and the cross –
measure borehole system. In both the horizontal and cross-measure borehole systems,
the captured methane has to be transported by way of pipeline to the surface.
Summary of Methods for Recovering Methane from Non-mined areas and Underground
Mines has been summarized in Table 1. (3)

1.1.2 Utilizing Drained Methane:

The coal-bed methane that is drained can be used as an energy source to the own
company. The methane in most cases is used as a way to generate electrical power for
the company. Not only is the gas being recycled but it is kept from re-entering into the
atmosphere, which is a great concern to the environment because of it being a dangerous
greenhouse gas.
For ventilation air methane (VAM), there is even ways to use VAM as a resource now to
further prevent the emission of methane into the atmosphere. Biothermica, a company
that specializes in turn-key projects in the fields of gaseous pollutant emissions control,
uses what is called a ‗VAMOX‘. The VAMOX converts VAM into carbon dioxide and
water vapor using the well known principle of regenerative thermal oxidation (RTO).
RTO is based on the cyclic reversal of the airflow through multiple vessels filled with
heat absorbing media to minimize heat losses during the oxidation process. Each ton of
methane oxidized by the VAMOX reduces greenhouse gas emissions by approximately
 18 tCO2e. In addition, whenever the VAM concentration is above 0.25%, heat can be
recovered as hot water, low grade steam or electricity can be produced from superheated
steam (4).
In other cases if the methane is of a very high quality it can be immediately compressed
into commercial gas lines and sold. This can be very profitable, especially to coal mine
operators who are not only profiting on the sale of coal production but also, selling the
methane that must be emitted anyway in order to mine and ventilate properly. For our
case, since we were not dealing with the mining aspect of the deal we used this approach
of trying to sell our methane, which is later explained in detail in the transportation
section.

2. METHANE FROM COAL BED RESERVOIRS :

Methane is present in high concentration in coal reservoirs and can be easily liberated from the
coal matrix by reducing the pressure in these coal bed reservoirs. Typically coal bed methane
reservoirs are made of fractures and the coal matrix. These fractures are called as cleats and
usually have much higher permeability than the matrix (5) .
Coalbed methane reservoirs consist of methane and other heavier components such as ethane and
propane in high quantities. The economics of coalbed methane depends upon several important
factors such as permeability and porosity, gas content, density of coal and drainage efficiency.

2.1 Permeability and Porosity:

The permeability of this type reservoir is usually low and is in the order of microdarcies.
Typically coalbed methane reservoirs have dual porosity system. Dual porosity systems have
primary porosity systems and secondary porosity systems.

1. Primary porosity systems: The porosity of matrix is the primary porosity of the system.
Since majority of the porosity is in the matrix, it is called as the primary porosity system.
The matrix is composed of micro pores which has large internal surface and has high
quantities of methane absorbed on it. The permeability is extremely low and is usually of
the order of microdarcies. As the reservoir pressure declines, gas is desorbed and released
into the fractures surrounding the matrix. The rate of desorption of gas depends upon the
temperature and pressure of the reservoir.
2. Secondary porosity systems: The matrix is usually surrounded by fractures. These fractures
can be horizontal or vertical and have more or less the same permeability. The permeability
of these fractures is usually hundred to thousand times more than the matrix permeability
and this fracture network is responsible for transporting the gas till the wellbore. Since the
porosity of the fractures is usually much smaller than the matrix, it is called as the
secondary porosity systems (6). Figure 1 shows the dual porosity system.
The fractures initially are filled with water and can have water saturation as high 99% to
100%. This water must be produced before the gas can flow into the fissure system. It is
natural for such reservoirs to have high water production in the initial stage however the
gas oil ratio increases at the later stages. The amount of water present in the matrix can be
neglected.
The fracture porosity and permeability reduces due to compaction and reduction of net stress but
it increases due to coal matrix shrinkage as gas gets desorbed.

2.2 Gas Content Determination:

Gas content estimation is usually done in the laboratory. Freshly cut samples are taken to the lab
and the rate of gas desorbed and the time taken is noted. Since some gas is always lost during the
transportation of the rock sample, corrections must be applied. The amount of gas lost during the
transportation is called lost gas volume; this volume can be quite significant and can be as high
as 50% in some high pressured reservoir cases. The relationship of gas content to the pressure at
a constant temperature is called sorption isotherm curve (Figure 2).

The amount of gas stored depends upon factors such as area, height of the formation, average gas
content and density of coal. The equation that relates the factors are given as:
G = 1359.7 * A * h * ρ * Gc
Where G = initial gas in place Standard cubic feet/ ton

A = Drainage area of the reservoir in acres

ρ = density of the coal in grams/ cubic centimeter
Gc = average gas content in scf/ton.
Coal density varies as the function of mineral matter content, moisture and coal rank, figure 2
shows.

2.3 Deliverability and Drainage Efficiency:

For higher deliverability, it is necessary to have extensive fracture network and its connection to
the wellbore. The gas content must be high to make economical sense. A saturated coal seam is
the one that holds maximum adsorbed gas as possible for given pressure and temperature
conditions. A coal seam will be under-saturated if the reservoir pressure is greater than the
critical desorption pressure, this implies an under-saturated coal seam can hold more gas at that
reservoir pressure. As seen from the sorption isotherm (figure 2), a coal matrix will store larger
amount of gas at higher reservoir pressures. The water is what contributes pressure that keeps
methane gas attached to the coal. In order to extract the methane, by way of a well, the well‘s
performance is divided into three main stages: (i) de-watering; (ii) Two-phase gas-water
production; (iii) declined production stage.

In de-watering stage there is no gas produced, water is simply being pumped out from the drilled
well. This allows the pressure to be decreased and the gas can then detach from the coal and
start to flow through the well. Primarily, in this beginning stage the wells will produce mostly
water.
In the two-phase gas-water production stage there is a decline of water production while a
noticeable increase in gas production. Usually the deeper the coal seams the less water that will
be present, and hence the sooner the well will begin to produce gas. This happens because; most
of the coal bed is being dewatered. The production in this stage is controlled by the relative
permeability of the gas and water. During this stage electric submergible pumps can be
employed to pump out water at higher rates.

Lastly in the declined production stage, the decrease in reservoir pressure is now responsible for
the shrinking of matrix and further increasing the cleat permeability. The gas production now
becomes steady. Coalbed methane reservoirs are often fractured to increase productivity of wells.

2.4 Reserve estimation and economics for Coalbed Methane Reservoirs:

Analytical solution: Analytical solutions provide exact solutions to approximate models.
Analytical solutions include production decline analysis and well test analysis:

2.4.1 Production Decline Curve:

It is a plot of production rate versus time at constant drawdown pressure. The period
in which the reservoir goes into pseudo steady state is used for decline curve analysis.
Under pseudo state conditions, the reservoir pressure behaves linearly with time. The
necessary condition for decline curve analysis is there should be no interference from
neighboring wells. The decline curve analysis not only gives information about the
extent of the reservoir but also gives future production rate versus time; hence this
plot is often used to give a forecast of cumulative gas production. We can either
estimate the reservoir block pressure given constant production rate or estimate the
production rate given constant bottom hole flowing pressure. Figure 3 shows an
example of production decline analysis for a typical reservoir.

2.4.2 Pressure Transient Analysis:

The required date here is pressure versus time for a given stable production rate. The
reservoir acts as being infinite in extent till the pressure diffusion hits the boundaries.
The duration till the reservoir acts as infinite in extent is called transient behavior.
The analysis of this transient behavior gives us information about the permeability
and skin of the well. Since well test analysis analyzes transient behavior, the
resolution of pressure gauge should be as high possible and time duration should be in
seconds preferably. The pressure diffusion in the reservoir depends upon the
permeability and porosity of the reservoir. Since both, the permeability and porosity
are very low for tight matrix such as coal bed reservoirs, it takes very long time for
the pressure to diffuse deeper and further away from the wellbore. Well test analysis
can be used not only to detect the boundaries but also the type of boundaries. For
special cases such as dual porosity reservoirs, well test analysis can reveal the fracture
and matrix permeability. Figure 4 shows response of pressure versus time for a
typical dual porosity reservoir.
Analytical methods could not be employed as there was no production history or pressure versus
time data available.

2.5 Reservoir simulation:

Numerical solutions unlike analytical solutions give approximate answers to exact models. It
works in exactly the opposite way as the analytical methods. The reservoir parameters such as
permeability and porosity are already known and we generate plots for block pressure versus
time and production rate versus time. We used CMGGEM for our numerical simulation. The
flowing bottom hole pressure was kept at 30 psi for all the wells. The well head pressure could
not be computed as the flow in the wellbore is multiphase flow. The estimation of well head
pressure becomes more complicated with multiphase flow as we have to consider the slippage
between light and heavy phases. Special correlations are required to compute well head pressure
accurately.

3. PRODUCTION ENHANCEMENT AND STIMULATION:

Over the life of a field, the productivity will be evaluated. After these evaluations are completed
a well may not need to be stimulated or enhanced, however some may need both enhancement
and stimulation to become productive.

3.1 Stimulation:
Stimulation is a process to remove damage around the wellbore and formation that
impedes productivity. Well or field stimulation is a treatment used to restore and/or
enhance the productivity of a field (7). Stimulations are divided into two groups: hydraulic
fracturing treatment and matrix treatments. Hydraulic fracturing treatments are performed
above the fracture pressure of the formation or zone in question. It involves creating a
fracture that would extend from the wellbore and into formation. This creates a very
permeable conductive path which allows easy flow of reservoir fluid from the formation
to the wellbore (8) Figure 5 shows a simple schematic of the hydraulic fracturing process.
After a fracture is created, proppants which are used with the fracturing fluids keep the
fracture opened until they expire or breakers are used to dissolve or breakdown the
proppants (9). Once the proppants are broken, the fracture closes thus shutting the
conductive pathway. Hydraulic fracturing is also used to increase the connectivity of a
formation (10). The fracture created would propagate in the direction perpendicular to
minimum stress (8), this would make the hydraulic fracture created connect other natural
fractures thus increasing the connectivity and productivity (10).
Another type of hydraulic fracturing treatment is Frac and Packs. Frac and Packs are very
similar to hydraulic fracturing, except that they are much shorter and are local around the
wellbore. The primary goal of the Frac and Packs is to create a very conductive path
through the damage regions around the well bore. The Hydraulic fracturing treatment
procedures and methods are applicable to coalbed methane reservoir in the way
mentioned here (11).

3.2 Enhanced Recovery:

The main goal of enhanced oil recovery is to restore or increase the productivity of a field
by displacing the formation fluid from the fractures, cleats and seams and also by
pressurizing the formation in this section, focus is given to CO 2 injection above other
alternatives. Coal has a very high affinity for CO2 (12) and depending on the grade of coal
can absorb really high amounts of CO2 (13) (14). With the CO2 displacing the CO2 from the
 cleats, fractures and matrix and also pressurizing the formation the productivity of the
field or well is increased. Also, because of the high affinity and capacity for CO 2 by coal,
the CO2 can be sequestrated (13).

4. METHANE TREATMENT:

The natural gas that comes out of the ground is not 100% pure methane but almost always has
contaminants that reduce the BTU value of the gas but are also dangerous. Due to this, the
natural gas has to be treated to meet but the government standards and the standard of the
customer. Figure 6 shows a generalized natural gas processing schematic.
The Oil-Gas Separator unit and the oil input are optional and not applicable in the coalbed
methane application. The Major contaminants of the natural gas are water, CO 2, and sulfur
dioxide (15). The problems associated with the contaminants and some solutions to how to
remove them are shown in Table 2. Natural gas that contains CO2 and sulfur dioxide are called
sour gas and the process of removing these contaminants is called sweetening (16).
Most of these contaminants though may have a bad influence and the quality of the methane gas,
after they have been extracted become valuable themselves. Element sulfur is mainly gotten as a
byproduct from the oil and gas industry (17). From CO2 injection, some of the gas may get mixed
and extracted with the methane; the CO2 is extracted from the methane during the treatment
process and can be reinjected.
Now that the location has been narrowed down to most likely the San Juan basin stimulation,
production enhancement techniques and treatments methods that are relevant to the basin would
be focused on.

5. WATER MANAGEMENT:

The Production of coal bed methane results in the release of water from the hydrocarbon bearing
formation which is subsequently co-produced with gas. This produced water is separated at the
wellhead and must be separated from the gas at or near the well head. Produced water accounts
for greater than 80 percent by volume of the residual material generated in the natural gas
industry. Cost-effective and environmentally acceptable disposal of these waters is critical to the
continued economic production and physical sustainability of CBM project (18).

While coal bed methane contributed less than 8% of the1990 gas production volume, coal bed
methane operations accounted for 13% of the produced water volume. Moreover stated on a
unitized basis, the produced water to gas ratio for coal bed methane averages 0.31 barrels of
produced water per 1000 cubic feet of gas (BBL/MCF) whereas the ratio for conventional non-
associated gas is 0.023 BBL/MCF. Thus a unit volume of coal bed methane on average produces
13.5 times as much water as a unit volume of conventional non-associated gas. Economic
management of produced water is a critical issue for coal bed methane development (19).

For a CBM field, the cost of handling co-produced water varies from a few cents per barrel to
more than a dollar per barrel and can add significantly to the cost of gas production. In some
areas, the volumes of water produced and the cost of handling may prohibit development of this
resource (20).
5.1 Brief History Of CBM Water Management:

Over the last fifteen years there has been an incredible transition in the disposal of CBM
produced water. Most of this transition has been led by environmental concerns about the
quantity of water that is being drained from our large underground aquifers and the
potential environmental impact of this surface discharged water.

When Coal Seam Gas production was first developed, limited environmental and
regulatory oversight existed. Initially, Gas Production Companies discharged the CBM
produced water to the nearest drainage or into a local waterway. Unfortunately this type
of surface discharge is no longer desirable and in most places has become an
unacceptable solution. While unmitigated surface discharge was inexpensive, it was not
effective at saving usable water for the landowner, and in some cases, there was negative
environmental impact on the soil and waterways.

As environmental concerns increased, impoundment ponds became the next step in

produced water management. Production costs rose as these structures required long
timelines for planning, eighteen month permitting cycles, large reclamation bonds, and
large upfront cash outlays for development. With continued regulatory oversight, multi-
million dollar treatment facilities were erected to improve the quality of surface
discharged water, but the cost per barrel of treated water has become un-economical, and
further surface discharge of the water after treatment is either limited or unviable.
Trends indicate that most CBM Production Companies are now closing their treatment
facilities, as the ongoing costs of ―treating‖ such enormous quantities of water is not
economical and the ability to surface discharge is disappearing (21). This necessitates the
need to identify and develop less complicated and more cost effective CBM produced
water treatment systems

5.2 Types of Water in Coal Bed Methane:

There are three different mechanisms by which water is stored in Coal Bed Methane:

1. First adherent moisture or bulk moisture which refers to the free water contained in
the cleat system and that has a normal vapor pressure. This is the volume of water
that must be removed during the dewatering phase to produce gas effectively.

2. Second is the inherent moisture that is water present in the micro pore system that
decreases the adsorptive capacity of the coal for methane. Although this type of water
storage is inconsequential when considering water disposal it is extremely detrimental
to the gas concentration of the coal.

3. The other forms of water found in coal seams include chemically bound water or
water of hydration. (22).

5.3 Factors Affecting Production of Water:

As shown in Table 3, the amount of water produced, as well as the ratio of water to gas, varies
widely among basins with Coal Bed Methane Production. Causes of variations include

1. Fracturing ease of cleats present in the coal (face, butt).

2. Thickness, density of coal.
3. Composition of coal in place i.e. whether coal contains sand, clay, or other solids
(abrasives) that interfere with the artificial lift systems employed to extract water.
4. The presence of multiple zones in coal and nature of material that separates the zones?
5. Depth of burial.
6. Duration of coal bed methane production in the basin. (23)

5.4 Produced Water and Treatment Technologies:

Typically, water treatment technologies are limited to treating specific constituent types
concentrated in water, e.g., dissolved solids, organics, conductive ions, etc. Depending on
the eventual use of the water and the desired constituent concentrations, treatment
processes are often coupled together to achieve required water use objectives. For this
reason, an integral aspect of the treatment process is the performance of water analysis to
ascertain the presence of specific constituents for any given water source. The dissolved
constituents of produced water are known as total dissolved solid (TDS) concentration.
Table 4 represents CBM produced water data collected in the San Juan Basin by the
Marathon Oil Company (24). This data does not necessarily reflect produced water quality
levels for other regions or natural gas facilities.

5.5 Water Treatment Methods:

The quality of water that is produced in association with CBM development will vary from
basin to basin, within a particular basin, and over the lifetime of a CBM well (25).There are a
variety of potential beneficial uses for CBM produced water that can be implemented by
CBM operators to manage this resource but the quality of the produced water can be a
deciding criterion for what option is chosen.

1. Electro dialysis
2. Reverse osmosis
3. Ion exchange resin
4. Freeze/Thaw evaporation
5. Artificial wetlands.
6. Ultra-Violet Light

5.6 Conventional Produced Water Disposal Options:

1. Injection of Original Water Produced.
2. Surface Discharge In deeper offshore environment.
3. Surface Discharge for beneficial Use of treated Water e.g. Irrigation
4. No liquid discharge resulting from evaporation of produced water.
 5. Surface Discharge in produced Low TDS water in High surface Water Stream Flow
Environments.
6. Modification of Hydrocarbon Techniques to reduce Ratio of Water /Hydrocarbon
Produced. This Project will attempt to design another disposal option for use as heat
transfer fluid for the geothermal generation of energy.

6. METHANE DISTRIBUTION AND STORAGE :

Everyday, close to 70 million customers in the United States depend upon the national natural
gas distribution network, which include natural gas distribution companies and pipelines, to
deliver natural gas to them. These customers currently consume nearly 20 trillion cubic feet (Tcf)
of natural gas per annum, accounting for about 22 percent of the total energy consumed in the
United States each year. This end use customer base is 92 percent residential units, 7 percent
commercial businesses, and 1 percent large industrial and electric power generation customers.
More than 1,500 companies carry out the natural gas distribution process (26).
Once the extraction and treatment of methane is complete, there may be several options available
to use it efficiently. Distribution will depend on the location of the production site, the distance
of the potential consumers from this site and the amount of production. If methane is coming
from a mine, it may be used to meet the energy needs of the mine or power plants nearby. If
production is higher than the amount being used by the mine or natural gas company itself, then
it has to be distributed. Ideally, natural gas has four potential consumers: Residential,
Commercial, Industrial and Electric power plants.
Natural Gas is a clean burning fuel compared to other fuels like gasoline or diesel. However,
under ambient conditions it is a low density gas and hence there are difficulties with its
transportation. Based on its requirements and current demand, there are ways to transport and/or
store natural gas which are discussed below.

6.1 Natural Gas Pipeline Transportation:

Transporting natural gas from the production site to the final customer is a multi-step
process. A natural gas pipeline system begins at the natural gas field. Once the gas leaves
the field (coal bed in this case), a pipeline gathering system directs the flow to a
processing plant or mainline depending on its quality. Ideally, gas is gathered by several
small diameter pipelines which take the natural gas to a company. Larger diameter
pipelines are required when the pipeline company distributes it to a market hub, local
distribution companies or sends it to an underground storage reservoir (27).

The natural gas main transmission lines are wide-diameter pipelines (20-42 inches),
operating on long distances, between production area, natural gas processing plant, other
receipt points, and the principal customer service area(s). The mainline branches off into
several pipelines of smaller diameter to connect with or serve specific customers. United
States has mainly two types of pipelines: Interstate (operating between States) and
Intrastate (operating within a State). In 2007, nearly 36 Tcf of gas was transported via the
interstate pipelines. Apart from these, smaller diameter (6-24 inches) pipelines belong to
the local distribution companies (27).
 Two important parameters which determine the amount of gas being carried by a pipeline
are its diameter (usually kept between 6-42 inches) and operating pressure (usually 500-
1500 psi). Those passing through populated areas operate at reduced pressures due to
safety reasons. Apart from these parameters, design of pipelines take into account cost
estimates for various possible combinations of pipe size, compression equipment, inter-
station distances, potential flexibility and expandability, appropriate wall thickness to
withstand high pressure and maintain the working pressure rate at a constant value.
Pipelines in United States run over distances as long as 2000 miles, feeding as much as
12000 MMcf/d (million cubic feet per day) of gas to states like Texas (the biggest natural
gas consumer in U.S.) and priced between $4 to $12 per thousand cubic feet of gas
flowing . To maintain the speed and flow rate of gas (nearly 10-20 miles/hr) through
them, compressor stations are installed at intervals of approximately 40-100 miles along
the line (27).

Natural gas transmission via pipelines also puts some quality restrictions on the gas being
carried to meet pipeline standards. It must be free from corrosive components like water,
carbon dioxide, hydrogen sulfide, nitrogen, oxygen, sulfur etc and solid particulates. The
gas should have a certain Btu range (1035±50 Btu) and be delivered at a specified
hydrocarbon dew point temperature to avoid it from condensing in the pipes (28).

6.2 Underground Natural Gas Storage:

Underground natural gas storage system facilities act as underground pressurized storage
vessels in which gas is stored at a high pressure. They provide for inventory management,
supply backup, and the access to natural gas to maintain the balance of the system so that
pipelines can operate at a constant and efficient rate especially during peak season. Most
underground storage facilities, 327 out of 399 at the beginning of 2008, were depleted
reservoirs, which were close to consumption centers and relatively easy to convert to
storage service. In some areas, however, notably the Midwestern United States, some
natural aquifers have been converted to natural gas storage reservoirs (27).
Two of the most important characteristics of an underground storage reservoir are the
capability to hold natural gas for future use, and the rate at which natural gas inventory
can be injected and withdrawn (its deliverability rate) (27). However, gas injection and
withdrawal capability declines with time and some enhancement techniques might be
necessary.

A pressure differential is required to push the natural gas out of the natural gas reservoir.
When this differential reduces, some amount of gas is left behind. Hence, there is always
a physically unrecovered amount of gas that remains embedded in the formation. In
addition to this unrecoverable gas, underground storage facilities contain some 'base gas'
or 'cushion gas'. This is the volume of gas that must remain in the storage facility to
provide the required pressurization to extract the remaining gas. In the normal operation
of the storage facility, this cushion gas remains underground; however a portion of it may
be extracted using compression equipment. Working gas is the volume of natural gas in
the storage reservoir that can be extracted during the normal operation of the storage
facility. There are three principal types of underground storage sites used in the United
States today: depleted reservoirs in oil and/or gas fields, aquifers, and salt cavern
formations (29).

6.2.1 Depleted Reservoirs:

The most common form of underground storage consists of depleted gas

reservoirs. Depleted reservoirs are those formations that have already been tapped
of all their recoverable natural gas. This leaves an underground formation,
geologically capable of holding natural gas. Moreover, using an already
developed reservoir for storage purposes allows the use of the extraction and
distribution equipment left over from when the field was productive. This reduces
the operating costs. Depleted reservoirs are attractive because their geological
characteristics are already well known. They are the cheapest and easiest to
develop, operate, and maintain. The factors that determine whether or not a
depleted reservoir will make a suitable storage facility are both geographic and
geologic. Geographically, depleted reservoirs must be relatively close to
consuming regions, transportation infrastructure, including trunk pipelines and
distribution systems. While depleted reservoirs are numerous in the U.S., they are
more abundantly available in producing regions. Geologically, depleted reservoir
formations must have high permeability and porosity. The porosity of the
formation determines the amount of natural gas that it may hold, while its
permeability determines the rate at which natural gas flows through the formation,
which in turn determines the rate of injection and withdrawal of working gas. A
major limitation of depleted reservoirs would be that in order to maintain pressure
in depleted reservoirs, about 50 percent of the natural gas in the formation must
be kept as cushion gas (29).

6.2.2 Aquifers:

Aquifers are underground porous, permeable rock formations that act as natural
water reservoirs. But, in certain situations, they may be reconditioned and used as
natural gas storage facilities. They are one of the least desirable and most
expensive storage facilities in that they demand time and money to discover their
geology and a lot of infrastructure development in terms of pipelines, wells,
extraction equipment etc. They require nearly 80% cushion gas and cause
underground water contamination. Upon extraction from a water bearing aquifer
formation, the gas typically needs further dehydration prior to transportation,
which requires specialized equipment near the wellhead. Aquifer formations do
not have the same natural gas retention capabilities as depleted reservoirs.
Therefore, natural gas that is injected escapes from the formation, and must be
gathered and extracted by 'collector' wells, designed specially to pick up gas that
may escape from the formation (29).

6.2.3 Salt Caverns:

Underground salt formations are well suited to natural gas storage in that salt
caverns, once formed, allow little injected natural gas to escape from the
 formation unless extracted. The walls of a salt cavern also have the structural
strength of steel, which makes it very resilient against reservoir degradation. In
addition, cushion gas requirements are the lowest of all three storage types, with
salt caverns only requiring about 33 percent of total gas capacity to be used as
cushion gas (29).

Developing a salt cavern consists of using water to dissolve and extract a certain
amount of salt from the deposit by drilling a well, leaving a large empty space in
the formation. This process is known as 'salt cavern leaching'. Salt cavern storage
facilities are primarily located along the Gulf Coast, as well as in the northern
states, and are best suited for peak load storage. Salt caverns are typically much
smaller than depleted gas reservoirs and aquifers. As such, salt caverns cannot
hold the volume of gas necessary to meet base load storage requirements.
However, deliverability from salt caverns is much higher than for either aquifers
or depleted reservoirs and they can start providing natural gas in few hours notice
in case of emergencies (29).

Essentially, salt caverns are formed out of existing salt deposits. These
underground salt deposits may exist in two forms: salt domes, and salt beds. Salt
domes are thick formations that can be as large as a mile in diameter, and 30,000
feet in height. Typically, salt domes used for natural gas storage are between
6,000 and 1,500 feet beneath the surface. Salt beds are shallower, thinner
formations usually within 1,000 feet in height. Because salt beds are wide, thin
formations, once a salt cavern is introduced, they are more prone to deterioration,
and may also be more expensive to develop than salt domes (29).

6.3 Natural Gas Transportation in Compressed, Liquified or Adsorbed Forms:

6.3.1 Compressed Natural Gas:

One way of transporting natural gas or methane is to store it in vessels and

distribute via tankers or containers designed specifically to carry it under high
pressure. One such form of natural gas is the compressed natural gas or the CNG
which is currently being used to some extent in the automobile industry for
vehicles like buses and trucks. However, lack of an effective, economic and safe
on-board storage system is one of the major technical barriers preventing
methane-driven automobiles from competing with the traditional ones (30).
Methane has a high energy per unit mass but it cannot be stored at a density as
high as other fuels, and thus has an energy density approximately one-third that of
gasoline (11 MJ/L for compressed natural gas at 24.8 MPa or 3600 psi compared
with 32 MJ/L for gasoline). Thus a compressed natural gas (CNG) fuel tank
would need to be approximately three times larger than a gasoline tank to allow a
vehicle the same driving range. The use of CNG has its disadvantages. The CNG
storage tanks must be pressure vessels constrained in their geometry (typically
cylindrical), and are also rather heavy (much more than 1 kg/L for steel tanks).
 Moreover, attainment of high pressures nearing 20.7 MPa (3000 psi) requires
costly multi-stage compression (31).

6.3.2 Liquified Natural Gas:

Liquified form of natural gas is one that has been converted temporarily to liquid
form (at the boiling point of methane at -161o C) for ease of storage or transport.
Liquefied natural gas takes up about 1/600th the volume of natural gas in the
gaseous state. However, due to costly equipment and infrastructure required, so
far LNG transportation has been restricted mostly to import and exports. This
requires a liquifaction infrastructure at the exporting end and a regasification
equipment at the receiving end (32). Moreover, LNG transport has not yet been
realized widely for passenger vehicles due to safety and leakage reasons as LNG
storage demands specially built cryogenic containers (33).

6.3.3 Adsorbed Natural Gas:

Methane can be stored in a physically adsorbed state at a pressure of 3.5 MPa

(500 psi) at energy densities comparable to methane compressed at 24.8 MPa
(3600 psi) (31). However, a number of practical problems need to be considered in
the ANG technology like presence of higher hydrocarbons and impurities in the
natural gas, mass transfer and heat transfer effects. Approriate sorbent
development with characteristics like high micropore volume, packing density
and surface areas is also a big challenge in this upcoming field (33). However, once
this technology is commercialized, it can solve the methane storage problem by
aiding pressure savings in storage vessels and bring them down to pressures at
which pipelines ideally operate.

7. ENVIRONMENTAL ISSUES IN COAL BED METHANE :

Coal Bed Methane (CBM) wells are being developed extensively in the areas of United States in
the past two to three decades for meeting the demands of Natural Gas in the country. So as in
developing any type of reservoir, there exist the environmental issues and challenges. The core
issues related to environment in the case of Coal Bed Methane are as follows:

 Disposal of Produced Water

 Underground Water table drawdown
 Methane contamination
 Noise Pollution
 Air Pollution
 Surface Disturbances

7.1 Produced Water Disposal:

During the production of gas from Coal Bed Methane, large volumes of water are
produced from the reservoir. The ratio of water to gas is very high generally in any
 reservoir but still the numbers vary according to the location of the reservoir and many
other factors including the duration of production of the reservoir , type of coal, etc.

The major issue in the development of CBM reservoir is the disposal of water as it is
large in volume. The common practices of the water disposal are discussed in the
previous part of the review in the water management section.

7.2 Groundwater Withdrawal:

One of the substantial environmental issues of CBM production is the underground water
withdrawal from the aquifer. In some of the basins coal is present in the aquifer, as a
result of which during production we need to pull out the water in the aquifer which leads
to drawdown of shallow groundwater. This affects the landowners and farmers who are
benefitted with the use of groundwater for irrigation, livestock and other household
purposes.
Another ancillary impact of groundwater withdrawal is occurrence of coal fires. In some
of the basins, this happens to be a major problem. Coal is most susceptible to self-heating
which is characterized by high intrinsic moisture and oxygen content. If the coal exists in
the aquifer, there would be water removal to extract gas which fluctuates the water table
in the aquifer. Due to this fluctuation, the heat of wetting potential increases. When the
water level drops in the aquifer, ambient air is drawn into the aquifer resulting in
combustion of the coals. This leads to massive fire inside the reservoir which vents out
steam and other sulfurous gases. The coal-seam fires are difficult to extinguish and has an
adverse impact on the quality of the coal inside the reservoir.

7.3 Venting:
The mobility of methane gas to the surface from the reservoir is a significant
environmental concern. The seepage of methane takes place mostly in the uncemented
annular spaces, natural fractures, through water wells and some abandoned oil and gas
wells. This seepage can lead to contamination of groundwater, kill vegetation and may
also result in fire and explosion hazards.
For an instance several pump houses exploded due to accumulation of methane gas in
some confined spaces which got ignited by a spark. The high content of methane gas in
the water samples leads to destruction of vegetation like plants, crops, trees and even the
wildlife which might depend on drinking the disposed water in the ponds.

7.4 Noise Pollution:

Coal Bed Methane producers are faced with challenging another environmental concern
of noise pollution which also has an adverse affect on the environment. To reduce the
concerns of landlords, industries need to deal with this problem quiet effectively.
The major sources of noise pollution in the course of development of CBM reservoir are
the compressors and pumps. The noise coming especially from the compressors can be
very loud and it might affect the hearing ability of the field officers working in the basin.
―Depending on wind direction, the roar of a field compressor can be heard three to four
 miles from the site. Near the compressor stations, people need to shout to make
themselves heard over the sound of the engines.‖ (34)

7.5 Air Pollution:

During the production from the CBM reservoir, there are many pollutant gases and other
air pollutants that come across leading to formation of a cloud of pollutant gases. The
major gases which are emitted are nitrogen oxides, sulfur oxides, carbon monoxide,
carbon dioxide, hydrocarbons and the particulate matter.
One of the sources due to which these gases are emitted is from the internal combustion
machines used for drilling and completion, compression of gas and transportation of gas.
Also the traffic at the well site increases the pollution and leaves a significant impact on
the air quality.

7.6 Surface Disturbances:

The CBM reservoir developments experiences continuous chain of constructions &
operations of wells, vehicle traffic, construction of pipelines, compressor stations and
many other small surface activities. All these factors add up to the disturbances created
on the surface which is also considered to be one of the potential environmental concerns.
The major impacts of the surface disturbances are the soil erosion, wildlife habitat
disturbance, destruction of agricultural fields and growth of weeds & other unnecessary
plants.

7.7 Remedies for Environmental Issues:

1. For the Produced Water disposal issue, we can adapt certain methods through which we
can dispose off, keeping in mind the economic feasibility of each process, which are
discussed in detail in the section of water management techniques.
2. For Groundwater withdrawal issue, we need to come out with a better solution so as to
not decline the groundwater table in the aquifer or else we can issue some regulations of
what limit of water we can dispose of for the production of gas so that we do not disturb
the needs of farmers or landlords for using groundwater for various purposes.
a. Also to control the coal-seam fire inside reservoir, we need to adapt proper safety
and health regulations and practice better techniques of improving productivity
without any explosion hazards.
3. For the Methane contamination issue, we should put an acceptable limit of seepage of
methane in the reservoir which can happen when we employ better drilling techniques.
4. For the Noise Pollution issue, we can come up with construction of noise arresting
obstacles around the noise-causing equipments like compressors and pumps, also keeping
in mind the cost. Also we can use high grade mufflers on the compressors and pumps
which minimizes the sound to certain limit (35).
5. For the Air Pollution issue, we need to incorporate regulations laid by the state
government on the limits of gas emissions. In order to reduce particulate matter we can
use the suppressants which arrest the particulate matter.
6. For the Surface Disturbances issue, we need to adapt proper planning activities (35) and
also we need to put up traffic regulations in whole of the reservoir area so as to control
the vehicular traffic.

8. ECONOMIC FACTORS IN THE DEVELOPMENT OF COAL BED

METHANE RESERVOIRS:
The major factor affecting the economics of coal bed reservoirs are discussed as follows:

 Natural Gas Price

 Capital Costs
 Cost of Implementation
 Transportation Costs
 Others

8.1 Natural Gas Pricing:

In the recent past there have been a lot of discrepancies in the price of natural gas. For the
development of CBM reservoir and to make an economic model, we need to make a
proper forecast of Natural Gas price for a considerable amount of time so as ―to project
the cash flows which acts as the basis of most financial measures applied to proposed
coal bed methane development projects‖ (36).
The economic model is a Discounted Cash Flow Model (DCF) which is used by most of
the companies which provides both an internal rate of return & NPV of an investment at
various discount rates.

8.2 Capital Costs:

For the initial start up of the reservoir production we need to have the capital costs which
include costs of land purchasing, permit issuing, drilling & completion methods,
equipment infrastructure and also the last but not the least the water management costs.
These costs depend on many factors like the number of wells to be drilled at the site and
at what depth the gas is present, etc. The costs also changes depending on the well head
price of Natural Gas at the basin (37).

8.3 Cost of Implementation:

Implementation costs include the operations & maintenance costs. These costs comprises
of labor, power fuel, repairs, field organization & supervision and other maintenance
costs (36). These costs keep on varying with time like in initial stages; the costs will be
higher because of well enhancements and pump replacements and other related problems
and slowly gets normalized when the system is in control.
8.4 Transportation Costs:
These include the costs required to transport the gas through different modes of transport,
either by pipelines or by diesel transport.

8.5 Others:
The costs in the others section include the income taxes which has both State & Federal
Taxes. ―Typical oil & gas investments often involve complex division of ownership
interest‖ (38)
ENGINEERING DESIGN:
1. Selection of Location:

Table 5 displays six popular coal bed methane basins. Based on the compilation of each basin‘s
characteristics, we chose the San Juan Basin. Even though the square miles of the area was less
than Powder River Basin and Northern Appalachian, the San Juan Basin proved to have more
reserve estimates at least 50 TFC. Along with the large amount of reserves, coal thickness on
average was around 40 to 50 feet. The coal bed methane mainly occurs in the Fruitland
Formation, with some methane trapped in the underlying and adjacent Pictured Cliffs Sandstone.
The rank of the coal is considered to be both ‗High- Volatile A Bituminous‘ and ‗Medium-
Volatile Bituminous‘. This is a good quality, considering the methane in a coal seam will depend
on the quality and depth of the coal. I n essence, the higher the energy value of coal and the deeper the
coal bed, the more methane in the deposit. In our specific area, well depth for our wells was
approximately 3,300 feet. San Juan basin is the most productive coal bed methane basin in the
world with resources of approximately 50 TCF. Coal bed methane wells with the highest
production (initial potential greater than 10 MCF day) occur in the over pressured, north-central
part of the basin. Highly permeable, laterally continuous coal beds override abandoned shoreline
Pictured Cliffs Sandstones and extend to the elevated recharge area in the northern basin to form
a dynamic, regionally interconnected aquifer system (39).
The specific area of interest was in the northern part of the basin in Colorado. Figure 7 illustrates
the boundaries of the San Juan Basin. We are looking to drill the wells slightly southeast of
Durango.

1.1 San Juan basin characteristics:

The basin selected for our project is located near the Colorado-New Mexico border. The
properties of the reservoir are listed Table 6 (40)
A block within area E was selected (Figure 7). The block is situated between 32N-33N
and 6W-5W. This block is approximately 60 miles in length and breadth.

2. Reservoir Simulation:

We used CMG GEM software for our numerical simulation. The flowing bottom hole pressure
was kept at 30 psia for all the wells. The well head pressure could not be computed as the flow in
the wellbore is multiphase flow. The estimation of well head pressure becomes more
complicated with multiphase flow as we have to consider the slippage between light and heavy
phases. Special correlations are required to compute well head pressure accurately.
CMG GEM reservoir simulator was used for reservoir simulations. The input for the model is
shown in Table 7 and the thermodynamic properties are shown in Table 8.

Drilling pattern and well spacing: Grid of 30 X 30 blocks was considered. Each block has length
and breadth of 10560 feet. From other literature, most coal bed methane wells, especially being
drilled into a virgin coal seam, are vertical wells. Figure 8 illustrates the use of a five-star
drilling pattern with four conventional vertical gas wells bordering a single injection well, with a
total of nine conventional vertical gas wells and 4 injector wells. From this initial set up we
shortly found through simulation, that injection wells were not feasible with our design.
Consequently, we used a simple pattern of 13 conventional vertical gas wells for production to
begin our simulation process. Each well was on average 3,200 feet in depth.
The well spacing between adjacent wells is at least 2 miles. The well configuration for thirteen
wells and configuration is shown below.

Initially only thirteen wells were drilled for the first year. Thirteen new wells were added each
year for next nine years. Total of one hundred and thirty wells were drilled in a span of ten years.
The smaller blocks within each block represents grid refinement. This helps us further to define
reservoir properties more accurately. The drainage area for each well is assumed to be around
100 acres. This drainage area is used to calculate lease cost for the land. The boundaries
considered are sealing fault, which means there is no communication with wells or aquifer
outside the block. Since the height of the formation is quite high (about 45 feet), we had taken
only vertical wells for consideration.

2.1 Results of Simulation Run:

The simulation results shown are for wells without any stimulation.
As shown in Figure 9, the initial water production is very high. It starts with 185 barrels
of water per day and starts to decline slowly. After the end of ten years, the water
production reaches 55 barrels of water per day. The gas rate rises steadily until it reaches
steady state and produces at around 320 MScf/ day.

The results show that as the water production declines steadily, the gas production
increases. The gas production is low to make any economical sense.
As seen from Figure 10, the cumulative water production for the field tends to flatten a
bit at later stages since the water production declines constantly. The cumulative gas
production for each year on the other hand rises steadily since the daily gas production
rate rises.
The Figure 11 shows there is hardly any influence from the adjacent wells. We assumed
this condition to be true for the remaining one hundred and thirty wells. The cumulative
gas and water production for each year were calculated based on this assumption.
Figure 12 shows the block pressure for each well, it declines to 1500 psi approximately
at the end of ten years.

2.2 Conclusions:
1. The production from wells without stimulation is very low and is not economically
feasible.
2. The production of gas rises steadily as the reservoir is de-watered
3. The well spacing of 2 miles is enough to avoid any well interference between and
two neighboring wells and this assumption can be extended to one hundred and
thirty wells.

2.3 Recommendations:
3. 1Recent studies showed, multilateral wells can improve productivity significantly and
also cut down the cost of operation and maintenance.
3. 2Such wells can be used to simulateneously discharge water into deeper formations.
3. 3Multilateral wells have smaller foot print.
 3. Overview of Stimulation and Enhancement
It is often required to fracture reservoirs for higher productivity. Mechanical properties of coal
are significantly different from conventional rocks. The young‘s modulus for coal is ranges
between 100,000 psi to 10,000,000 psi. Such low of young‘s modulus means very wide and
complex network of hydraulic fractures. Fractures are created in multiple directions including
vertical directions possibly to cleat system. Hydraulic fracturing basically connects the cleat
system to the wellbore increasing productivity of the well. The fracture pressure for San Juan
basin as reported in literature is about 5000 psi and it requires at least about 200,000 barrels of
water to fracture. Figure 13 shows the plot of fracturing pressure and amount of fluid required to
fracture the reservoir. The high pressure required fracturing San Juan basin could be because of
entry friction; entry friction is the friction in the perforations, perforation friction junction and
flow constriction near the well bore region can contribute to significant fracture resistance
pressure (41).
The field evaluated was put up for evaluation for stimulation and enhancement due to the low
permeability of 0.0001 and initial low production. Stimulation and enhancement implementation
was done through the simulation. The model had to be edited to apply the stimulation and
enhancement methods of choice. To observe the effectiveness of the stimulation and
enhancement methods, the production behavior of 13 wells were observed over 10 years.

3.1 Enhancement:
The initial plan for the project was to perform enhancement through gas injection by the
means of CO2 injection. Carbon Dioxide injection was the favorable choice for many reasons
including the high affinity coal has for carbon dioxide in coalbed methane formations, the
opportunity to perform carbon dioxide sequestration which allowed help to the reduction of
green house gas. Literature also indicated good results through this process. However, after
setting up the model to accept the injection of carbon dioxide into the system, it was
discovered that the model could not process gas injection. It was difficult to inject CO2 into
the reservoir without exceeding fracturing pressure.
The model had difficulties with the numerical calculations converging. We believe that the
main problem is that the system is too tight due to the low permeability and model cannot
handle gas injection under low permeability. Because of this alternative methods were
searched in stimulation to treat the low permeability around the wellbore.

3.2 Stimulation:
Hydraulic fracturing was used as the stimulation method because it would allow us to treat the
low permeability around the wellbore and create a highly conductive path from deep in the
formation to the wellbore allowing a huge improvement in the flow of gas (42). Along with these
benefits, literature also shows improvement in recovery due to hydraulic fracturing in the San
Juan region (42). It was also discovered that the model created could not simulate the hydraulic
fracturing process. Despite this, the effects of a hydraulic fracture were implemented into the
model. The first thing in modeling the effect of a hydraulic fracture was creating a fracture that
would extend from the wellbore to the formation. This was done by implementing local grid
refinement that allowed the creation of a plane through the wellbore that would act as the
fracture. Next, to simulate the highly conductive nature of the fracture the permeability within
the created plane was given a much higher permeability compared to the formation. Because the
model could not perform hydraulic fracturing the method employed to simulate the effects of the
hydraulic fracture has some limitations. The assumptions made about the nature of the fracture
due to this method are listed below:

1. All the wells are fractured

2. Constant conductivity throughout the fracture
3. Constant permeability throughout the fracture
4. The height of the fracture is equal to the thickness of the formation.
5. The fracture orientation is a constantly perpendicular to the vertical wellbore.
6. The fracture has no tip, and tip effects are not simulated.
Also, because the model could not compute the hydraulic fracture process, assumption had to be
made on the treatment size and results from hydraulic fracturing. In other to make the most
accurate assumptions literature was searched to find a formation with properties very similar the
field here and use their treatment schedule and the results they obtained. A paper was found that
had a field in the same San Juan region with properties extremely close to this field (43). Based on
this, the treatment size and resulting fracture length created are shown below (43):
1. Fracture fluid is nitrogen foam (75% gas and 25% water)
2. 300,000 barrels of fracture fluid is used
3. 200,000lb of 40/70 mesh proppant sand is used.
4. Resulting fracture length is about 2300ft.
5. Permeability increased to 2md in the created conductive path.
Figure 14 shows the well distribution and the effects of hydraulic fracturing on permeability.
Nitrogen foam is used because of the great success it has in this region and the non-swelling
effect it has on coal. The benefits of the hydraulic fracture are shown below:
1. A 1450MMSCF increase in gas production
2. A 0.6MM barrels decrease in water production.
Since there is less water produced money is saved in water production and more money is made
since there is an increase in gas production. The hydraulic fracture allowed us to more than 4
times increase gas production after the first year as shown in Figure 15. Cumulative gas and
water production is shown in Figure 16 and Figure 17 respectively. Water rate is shown in
figure 13. The hydraulic fracture is considered to be a success, because we reduce water
production and increase gas production, we also increase gas production rate 4 folds as shown in
Figure 15 and reduce water rate by almost 50% as shown in Figure 18 in the first year of
production.

4. Overview of Gas Treatment:

The natural gas produced cannot be sold raw without treatment due to the presence of impurities
and standards. Table 9 below shows the general component make-up of raw natural gas. There
are impurities local in this region present in the natural gas, some of which are dangerous and
possess health risks like hydrogen sulfide others which can damage equipment and reduce the
BTU value of the gas like water. The major impurities in the natural gas are shown below:
  CO2
 SO2
 Water
 Fracture fluids

Government has described the standard of natural gas to be considered to have an average
standard of heating units not less than 1000btu per cubic foot of gas under the following
condition (44):

 At a temperature of 60° F.
 Under a pressure of 30in of mercury.

4.1 Treatment of Gas:

Due to high initial capital cost of installing a gas treatment facility, the treatment of the gas is
subcontracted to a treatment facility called the Ignacio treatment facility owned by Williams
LLP in Ignacio about 20miles from the field location.

5. WATER PRODUCTION AND DISPOSAL

Water production and disposal assume a greater degree of importance in coalbed methane
(CBM) projects than in conventional oil or gas operations. In marginally economic coalbed
projects, the water disposal costs and the attendant environmental accounting are critical factors
in the investment decision; water disposal costs economically make or break a marginal project
(45)
.
Normally, water must be removed from the coal to lower the pressure and to initiate methane
desorption; however, near mining operations there may be only small amounts of water to
produce. The operator can also anticipate large amounts of water being produced early in the
process but decreasing thereafter to an eventual low level. Therefore, water disposal problems
decrease with time, and the greatest economic burden is placed on the operator in the first few
years.
Water purity ranges from nearly fresh around the edges to marginally saline in the deepest coals
of the San Juan basin. Water purity and the quantity produced determine the means of disposal
and the costs of disposal. Suspended solids, total dissolved solids, and oxygen demand of
produced waters have the most impact on water treatment.
Before investing in a CBM process, a multiplicity of questions are to be answered concerning the
water to be produced—questions concerning quantity, flow rates, chemical content, disposal
means, monitoring, and environmental regulations. Perhaps no other factor affects the economics
and feasibility of CBM projects as much as water removal and disposal. It has been suggested (45)
that a truer indicator of the value of a well would be a plot of gas/water ratio rather than gas
production alone. As a whole, CBM operations result in 0.31 barrels of water produced per 1,000
cu ft of methane (46).
5.1 Produced Water Disposal In San Juan Basin:
The San Juan Basin is located in southwestern corner of Colorado and extends into the
northwestern corner of New Mexico. The basin encompasses parts of Archuleta and La Plata
counties in Colorado and into parts of San Juan, Rio Arriba, Sandoval and McKinley counties in
New Mexico.
On the Colorado side of the basin, the Ignacio Blanco Field is where the vast majority of wells
are producing gas and water. In 2000, an estimated 1,790 wells generated conservatively
25,293,071 barrels of produced water with 403,025,158 mcf gas (47).On the New Mexico side,
producers reported that the Basin Fruitland Coal gas pool produced the highest volume of water
associated with gas in the basin, in the amount of 6,033,799 barrels of water associated with
491,374,058 mcf gas. High volumes of water (over 1 million barrels each) were also reported at
the Blanco-Mesa Verde pool and the Basin Dakota Pool (48).
5.1.1 Concerns and Issues of Produced Water Disposal In San Juan Basin
Produced water management and disposal is a major issue in the San Juan basin. Firstly,
Produced water associated with production of Coal Bed methane incurs close to 50% of
the capital and operating costs associated with production of methane from unmineable
coal bed seams .The methane produced in the San Juan Basin has an average water to gas
ratio of 0.031 barrels per 1000 cubic feet of gas (Bbl/MCF). Economic management of
produced water is an especially critical issue for coal bed methane development as
producers look for treatment alternatives in an effort to find economic competitive
disposal alternatives (49).
Secondly, Deep injection which is the predominant disposal technique in the San Juan
Basin is a costly practice as operators must consider capital expenditures, direct operating
costs, and gathering costs involved. Total disposal costs can vary widely from about
$0.12/bbl in SE New Mexico to more than $5.00/bbl in some Colorado basins. (at
$5.00/bbl that‘s over $38,000/ac-ft) (50).

Finally, treatment of produced water for beneficial use has significant appeal in most arid
western states because of the need to conserve valuable water and as a way to reduce
costs but this basin lacks the infrastructure needed for most management options. This
places emphasis on the need to identify and develop less complicated and more cost
effective CBM produced water disposal options.

5.2 Produced Water Project Objective:

The objective of this aspect of the project was to develop an alternative water disposal
technique by using produced water generated from the modeled field as water supply for
a Geothermal Power Generation Plant located in the same area (60 Miles from field).

5.2.1 Project Benefits:

The benefits of this aspect of the project include:

1. Conserve river water for other beneficial uses in New Mexico.

 2. Reduce the diversion of water from the San Juan River for cooling at San Juan
geothermal power generation Station.
3. Reduce the volume of water that must be handled and injected by producers.
4. Reduce producers‘ water handling and injection costs.
5. Establish an infrastructure to significantly minimize produced water injection
in the San Juan Basin.
6. Establish area-wide opportunities to reduce produced water handling and
injection costs.

5.3 Produced Water Characterization:

5.3.1 Water Production Rates From Methane Wells:
The amount of water produced from CBM wells typically starts at a high volume
and declines significantly once the coal seam becomes depressurized. In the San
Juan Basin the typical initial rate of produced water is 400 barrels per day per
well. But, over the 10-20 year life of a well, it will average less than 100 barrels
per day (51).
Table 10 shows typical water production rates and water to gas ratios for the San
Juan basin. The actual amount of water produced, as well as the ratio of water to
gas, varies widely from area to area within a basin. The variations are due to the
original depositional environment, depth of the coal seam, type of coal, and
means of CBM production (51). Figure 19 gives the Water production schedule of
the modeled area of the Fruitland formation.
In this simulation, the water production rates showed a significant decrease by the
end of the first month of production. Figure 20 shows the production rate of
water for a single well for the simulated area.
5.3.2 Water Decline Rates And Estimates From Model:
The anticipated schedule of water production throughout the life of the project is
needed for an accurate economic evaluation. Water disposal and operating costs
depend upon knowing the water production rate from an entire field. The water
production with time data of a production unit in the field may be described with
decline curve analysis if the subject production unit does not experience
interference. Then, it would be appropriate to have either a field or an isolated
well as a unit.
If the data points are treated as an exponential decline, then the resulting straight
line can be extrapolated to any later time which represents the water production
schedule of a single well in the field without interference from other wells. If the
decline rate can be established for all production units or for the field as a whole,
the total load schedule can be determined for the water treatment facilities,
discharge into surface streams, or injection into disposal wells.

From the results of the modeled area (Figure 21), a decline curve was created
treating the water production data as an exponential decline. This was used to
determine an average production rate from a single well. A steady rate of
 65bbl/day was calculated and this was used as a base average value throughout
the production life of the well. The Water Production rate is shown in Table 11.
5.3.3 Chemical Content:
Quantity and chemical content are the two important considerations of waters
produced from coal seams. Some treatment at the surface is necessary regardless
of the disposal method. A representative analysis of coalbed water is given in
Table 12, which is a compilation by Lee-Ryan (52) for waters in the San Juan
Basin.

Perhaps the single most critical parameter which can serve as a surrogate
parameter for produced water quality is total dissolved solids (TDS). This is true
because TDS is usually associated with undesirable environmental impacts on
aquatic organisms and potential drinking water sources, and, may also influence
injection formation fluid chemistry compatibility.

5.4 Produced Water Management Options:

This project has identified two water disposal management options to reduce operation
cost and put waste water for beneficial use based on the disposal regulations and
infrastructure in the San Juan Basin.
Produced water from the model will be treated for use as heat transfer fluid and fracture
fluid for use in a nearby Geothermal Power Plant.
The Remaining excess will be deep injected according to the provisions set by the
National Pollutant Discharge Elimination System (NPDES)
1. The design of produced disposal and treatment options in this project is dependent on
three important factors:
2. The quantity of produced water to be treated in barrels per day (bbls /day),
3. The chemical quality of the produced water (concentrations in mg/L of chemical
constituents-of-concern), and
4. The disposal requirements in terms of mode and quality issues (usually determined by
the government regulations).

For this project, the design criteria for the treatment of water for geothermal purposes
include:
1. Requirement of 7,253,357 Barrels of water for an operational period of 10 years, as
determined by the Geothermal Energy Design Group. The breakdown of this volume of
water and their uses is given in Table 13.
2. A total dissolved solids (TDS) concentration of about 5,000 mg/L as set by the NPDES
as the TDS limits for Surface Discharge of Produced water. This criterion fits use of
water for Hydraulic fracturing and use as heat transfer fluid.
 Water estimates is based on a 10-year operating life of the power plant

5.5 Treatment Process Selection:

Three different treatment process systems for removal of specific types of water quality
constituents were evaluated. The three process systems include:
1. Deoiling
2. Organic Removal
3. Partial Demineralization

These three systems have been identified by the Gas Research Institute as the process
systems that would meet the NPDES permit requirements for beneficial use discharges
for the San Juan Basin (49).
The treatment process systems and the unit equipments required are listed in Table 14.
The selection of these three treatment process systems for this analysis is based on the
water quality data presented in Table 15 and discharge permit requirements set by
NPDES for surface discharge. Different combinations of unit treatment processes within
each treatment process system were varied to determine which were the most cost-
effective.
The Process flow sheet for the water treatment plant for produced water is given in
Figure 22. The plant is designed with a basis of 3 gallons per minute of untreated
produced water and treated water effluent of 1.25 gallons per minute. The Plant has 75%
overall efficiency, with the Reverse Osmosis units having an efficiency of 33%.

5.6 Deep Well Injection:

5.6.1 Underground Injection:
One management option for produced water is to inject it underground in
accordance with the state and federal laws. Injection wells have over the time
become popular amongst the oil and gas industries especially CBM reservoirs as
in some cases it is the only disposal mode available.
Injection is dependent on a variety of factors mainly hovering around the
availability of formation; quality of water being injected, quality of water in the
receiving formation, storage capacity of the receiving formation. Injection
basically refers to emplacement of water into an aquifer or reservoir by pumping
the water into an injection well completed in a zone or formation that is capable
of receiving and storing water. (53)
Injection wells are regulated by Underground Injection Control Program (UIC),
which was initiated under the Safe Water Drinking Act (SDWA) to prevent
contamination of all USDWs (Underground Sources of Drinking Water).The
program although is overseen by EPA the final say is in the hands of state.
5.6.2 Well Classification:
EPA has provided definitions, regulations which divide the injection wells into
five different categories. EPA‘s definition depends on several criteria, such as
purpose, quality of injecting fluid, location of USDW with respect to injection
wells.
Class II wells have been identified for the Oil and Gas industries including CBM.
Injection is basically carried out in a formation which is not an underground
source of water that is TDS content is greater than 10,000 mg/liter. Class II wells
have been further divided into three subclasses which are explained as follows.
1. Class II-R: - These wells are used to inject water or other fluids into
producing horizons in order to enhance production.
2. Class II-D: - These wells are used for disposal purpose‘s that is pumping
fluids into zones other than producing zones for disposal purposes.
3. Class II-H: - These wells are used to inject and store oil and natural gas in
order to extract it later.
Hence for CBM purposes we fall under the second option.
5.6.3 Factors Affecting Deep Injection:
There are certain technical considerations which have to be incorporated such as
the geology, economy, engineering considerations. Some set of issues that need to
be focused upon are as follows.
1. Formation Suitability-Various factors such as depth, relative location with
respect to producing wells, from USDW, effects of faulting and fracturing
have to be considered.
2. Isolation- The formation must be vertically, laterally either be separated or
confined from all other underground sources of drinking water and other
zones which are not permitted for disposal.
3. Porosity-Porosity refers to the percentage of void spaces hence the
receiving formation should have sufficiently high porosity whereas the
confining zones should have none.
4. Permeability-Permeability refers to the relative ease with which fluids can
be transmitted under a potential gradient. Receiving formation should have
high permeability whereas the confining zones should have low in order to
prevent seepages from occurring.
5. Storage Capacity- Storage capacity limits the volume of fluids that can be
stored. Laboratory tests can be carried out in order to calculate porosity,
bulk volume and in turn the pore volume which can be extrapolated in
order to attain the big picture.
6. Reservoir Pressure- Reservoir pressures limit the rate at which fluids can
be injected.
7. Water Quality- The quality of water both inside the formation and the one
to be pumped should be monitored in terms of chemical compatibility.
 Once injection is done testing criteria‘s are assigned in order to assure that the
injection wells are mechanically sound. Mechanical Integrity Tests (MITs) are
performed on all injection wells in order to assure the integrity of wells internal
components such as casing, tubing, and packers. Timely reporting to EPA is
mandatory. Once the capacity of an injection well is met it must be plugged and
abandoned in a routinely manner with guidelines issued by EPA.
5.6.4 Alternative Injection Methods
1. Produced water can be injected into coal seams above or below the producing
zone. Injection of water will most definitely not have any detrimental effects on
gas production. Also the seam can be a depleted one hence can and should be
used to save costs of drilling and completing an injection well.
2. Aquifer Storage/Recovery-ASR refers to the process of injecting water into an
active aquifer for subsequent retrieval later. The water quality should be in
accordance with non exempted aquifer that is less than 10,000 mg/liter hence
certain pretreatment procedures needed to be carried out.
For our CBM development and considering our economics and resources we will
be emplacing all the excess produced water into class II-D wells.

5.7 Predicted Economics Of Water Management Options:

5.7.1 Key Economic Factors:
The economics of coalbed methane produced water management in the San Juan
Basin are influenced by four key factors:
1. Future natural gas prices and, most critical today, the ―basin differential.‖
While natural gas prices at the Henry Hub have recently ranged from $4 to
$4.069 per Mcf, the prices paid at the White River hubs have ranged from
$3.8 to $3.9 per Mcf, for a persistent ―basin differential‖ of $0.219 per
Mcf.
2. The volume and timing of gas and water production from individual coal
seams in distinct portions of the basin. Expected gas recovery from a
CBM well ranges by order of magnitude, from 0.1 Bcf to 1 Bcf per well;
and, water recovery varies twenty-fold, from 100,000 to 2,000,000 barrels
per well.
3. The capital and O&M costs for drilling and operating wells of different gas
and water productivity and at depths of 300 to 3,000 feet.
4. The coalbed methane produced water management option selected by the
operator, as discussed below.
5.7.2 Water Disposal Alternatives:
In this project, the two water disposal alternatives implemented include:
1. Actively treated water for use in geothermal electricity power generation
2. Deep re-injection of untreated produced coal-bed methane water.
5.7.3 Capital And Operating Costs Of Actively Treated Water:
This alternative involves constructing water holding and residual concentration
storage impoundments, installing a water treatment system involving reverse
osmosis (RO), surface discharging the treated water, and either trucking or deep
re-injecting the residual concentrate.
Capital Costs. The capital costs are for a large, central unit able to service 96-
producing CBM wells.
1. The cost of three surface discharge points is estimated at $24,000 (from above),
plus $100,000 for water piping and $110,000 for studies and permits, for a total of
$234,000 for a 130-well unit.
2. The cost of one 3-acre (20 acre-foot) infiltration impoundment (with a capacity
of 150,000 barrels) is estimated at $92,250 (from above). This would provide
storage for about 5 days of water production from a 130-well unit. Two such
impoundments are required to provide 10 days of produced water storage
capacity. The cost of a third smaller (10 acre-foot) lined impoundment for storing
the reject water (concentrate) from the RO unit is estimated at $151,900, plus
piping. This would provide storage for up to one month of reject water. The total
cost for impoundments is estimated at $336,400.

3. Assuming a 130-well unit and 320 barrels of water per day per well (average
water rate for first 2 years), 3 300-gpm (10,286 barrel per day) units are required
with capacity to treat 30,000 barrels per day.

4. The cost for 3 RO units (from Filter Tech) is $2,212,000. Assuming 20% for
site preparation, the electrical system, building, etc., plus 10% for contingency,
insurance and other, the cost for three units is $2, 880,000.
5. Two options, trucking and deep disposal exist for disposing of the residual
concentrate, estimated at 10% of the treated water or 3,000 barrels per day.
6. If trucking is the option, these costs are included in O&M costs, presented in
the next section. The total capital costs for using active water treatment (with RO)
are as follows for a 900-gpm (30,860 barrel per day) facility:

The cost for the RO unit and associated facilities, assuming trucking of the
residual concentrate to disposal, is $3,450,000 or $26,538.5 per well for a 96-well
unit. Adding a deep disposal well and injection facilities would eliminate the costs
of trucking the residual concentrate, but would raise the capital costs to
$4,380,000 or $33,693 per well for a 130-well unit (54).

Operating and Maintenance Costs:

Operating costs for the 3 RO units are estimated at $233,100 per year for a 130-
well unit, or $0.03 per barrel of water treated (assuming a capacity of 30,000
 barrels per day) and an operating factor of 95%, as shown below. Adding the
costs of maintaining the discharge points and impoundments, and providing
electricity and maintenance for the pumps, brings operating costs to $0.04 per
barrel of water produced. If trucking is the option, the costs for operating the RO
unit, pumping the water, operating the discharge points, and disposing of the
residual concentrate are estimated at $0.24 per barrel of water produced assuming
water trucking costs of $2.00 per barrel of residual concentrate and 10% residual
concentrate (54).
5.7.4 Transport Costs of Actively Treated Water:
Two alternatives are available to transport water to the geothermal plant that is
located at about 60 miles away from the central treating facility. They include:
1. Trucking, this utilizes trucks with a capacity of about 4,500 gallons to transport
water. This mode requires low capital cost, a high operating cost and major risk
involved are road accidents.
2. Pipeline, this requires a huge capital investment, low operating cost and the risk
involved is line failures.
The trade-off between both choices is never clear or obvious but operators
usually prefer trucking as the preferred option if produced water is less than 225
bbl/day. This option was chosen for this project as the average daily production
was 65 bbl/day.

Prior to this project, transportation cost analyses of produced water have focused
on the cost per barrel transported. Katz et al (2006) estimated that between $0.40
and $0.90 is spent transporting each barrel (42 gallons) of produced water based
on assumptions stated in Table 16. The assumptions were based on the following
figures: diesel costs $2.50/gallon, truck fuel mileage equals 10 miles/gallon,
driver‘s pay equals $19.50/hr, driver travels 40 miles/hr, and the central facility
operator‘s pay equals $22.50/hr. Maintenance includes oil changes, tires, and
other mechanical needs, and central facility represents the operator required to run
the central reinjection facility (55).

Therefore, approximately $1.35 is spent for every mile the produced water is
transported. The distance from power plant to the central facility (60 miles) was
multiplied by $1.35 in order to determine the total transportation cost per trip
from the facility. The total cost incurred over a 10-year period is given in Table
17.
5.7.5 Cost Analysis for Deep Injection:
The cost analysis for deep injection includes the cost for drilling one injection
well, cost of transporting to the well and maintenance of the well (56). The cost
estimates for this project is given in Table 18. They include both capital and
maintenance costs for operating the injection well for a period of 10 years.
 5.7.6 Cost Summary:
The total cost incurred in management of produced water is summarized in Table
19.

6. NATURAL GAS DISTRIBUTION:

6.1 Overview of Colorado’s Resources:

Colorado is substantially rich in fossil fuels and other sources of energy. It has ten of the
Nation‘s 100 largest natural gas fields and three of its 100 largest oil fields. Conventional and
unconventional output from several Colorado basins typically accounts for more than 5 percent
of U.S. natural gas production. Coalbed methane accounts for over forty percent of Colorado's
natural gas production, and almost thirty percent of all coalbed methane produced in the United
States. Coalbed methane production is active in the San Juan and Raton Basins, and further
development is possible in northwest Colorado‘s Piceance Basin, which holds the second-
largest proven reserves in the Nation (57).

6.2 Natural Gas Consumption Trends in Colorado:

Colorado has a population of around 5 million with 20 gas utilities. State profile data from
Energy Information Administration database for Colorado for the year 2008 suggests that the
residential sector contributed the most (68%) to the total gas utility revenues followed by
commercial (30%), electric power (1.7%) and industrial sectors (0.3%). The annual state
consumption was nearly 342 Bcf the same year (58). Natural gas consumption by the electric
power sector has been increasing since 2003, with a dramatic increase in 2007 putting the sector
second only to the residential as the leading natural gas-consuming sector in Colorado. About
three-fourths of Colorado households use natural gas as their primary energy source for home
heating, one of the highest shares in the Nation. (57)

Colorado uses only about two-fifths of its natural gas production. The remainder is transported to
markets in the West and Midwest. Colorado is part of the transportation corridor for shipping gas
from the Rocky Mountain supply region to the Midwest and West markets. Its natural gas
production is growing, and construction of a new pipeline, known as the Rockies Express
Pipeline, was recently completed to help move the rapidly increasing output to the Midwest (57).

6.3 Destinations for Natural Gas from the North Western San Juan Basin:

6.3.1 Interstate Pipelines:

In Colorado, the Rocky Mountain Natural Gas Company provides interconnections

between natural gas producers in the western part of the State and the TransColorado Gas
Transmission Company, which travels southward into New Mexico en route to the
California market, through the Transwestern Gas Company and El Paso Natural Gas
 Pipeline Company systems. In addition, in 2006, the TransColorado Gas Transmission
Company installed a capability to reverse flow on its system, providing natural gas
producers operating in the developing Unita/Piceance Basins of eastern Utah and western
Colorado the opportunity to also transport their product eastward to the Cheyenne Hub in
eastern Colorado via other regional natural gas pipelines to access transportation services
to Midwest markets. TransColorado Transmission also further expanded its northern flow
capacity out of the San Juan Basin in southern Colorado in 2008 to give producers in that
area greater access to these Midwest markets, in addition to their traditional Western
regional market.

Also providing transporation is the western portion of the Rockies Express Pipeline
system. Completed in February 2007, the 328-mile Rockies Express-Entrega system has
the capability to transport 1.5 Bcf per day of natural gas supplies from northwestern
Colorado and southwestern Wyoming to the Cheyenne Hub located in northeastern
Colorado. A major LDC (Local Distribution Company) in the western part of this region
is Questar Gas Company. The Public Service Company of Colorado is the major
distributor of gas in Colorado, with more end-use customers in a single State than any
other company in the region. Colorado Interstate Gas Company provides nearly all of the
gas to this LDC (59).

The expanding development of natural gas resources in Colorado, especially for coal bed
methane and tight-sands natural gas, has greatly increased the amount of natural gas
pipeline capacity built within and exiting the area in recent years. Header laterals have
been built to transport natural gas from local gathering systems to interconnections with
major interstate natural gas pipelines such as Colorado Interstate Gas Company. In
addition to these laterals, several existing intrastate natural gas pipelines have also
provided support to producers needing natural gas transportation services in the area (59).

Looking at the overall spread of the interstate pipelines, there is a possibility to construct
and connect a new gas pipeline from our production area to the Colorado Interstate Gas
Pipeline. Colorado Interstate Gas (CIG) consists of approximately 4,200 miles of pipeline
with a design capacity of approximately 3,750 million cubic feet per day. CIG is
comprised of pipelines that deliver natural gas from production areas in the U.S. Rocky
Mountains and the Anadarko Basin directly to customers in Colorado and Wyoming and
indirectly to the midwest, southwest, California and Pacific northwest. CIG also owns
interests in five storage facilities located in Colorado and Kansas, which collectively have
approximately 35 billion cubic feet of underground working natural gas storage capacity
and one natural gas processing plant located in Wyoming (60).

6.3.2 Local Distribution Companies:

Distribution is the final step in delivering natural gas to end users. While some large
industrial, commercial, and electric generation customers receive natural gas directly
from high capacity interstate and intrastate pipelines (usually contracted through natural
gas marketing companies), most other users receive natural gas from a local distribution
company (LDC). LDCs are companies involved in the delivery of natural gas to
 consumers within a specific geographic area. With the expansion in the gas pipeline
network, the local distribution companies have expanded their network as well. There are
two basic types of local distribution companies: those owned by investors, and public gas
systems owned by local governments.

Local distribution companies typically transport natural gas from delivery points along
interstate and intrastate pipelines through thousands of miles of small-diameter
distribution pipe. Delivery points to LDCs, especially for large municipal areas, are often
termed 'citygates', and are important market centers for the pricing of natural gas.
Typically, LDCs take ownership of the natural gas at the citygate, and deliver it to each
individual customer's location of use. This requires an extensive network of small-
diameter distribution pipe (61).

6.3.3 Market Centers/Hubs:

6.3.3.1 Importance of Hubs:

Since 1980‘s, market centers have become a key component of the North
American natural gas transportation. Located at strategic points on the
pipeline grids, these centers offer essential transportation service for shippers
between pipeline interconnections, as well as provide these shippers with
many of the physical and administrative support services formerly handled by
the natural gas pipeline company as ―bundled‖ sales services. (62)

Figure 23 shows Natural gas market centers or hubs with respect to natural
gas transportation corridors.

6.3.3.2 Hubs in Colorado:

Colorado has two market hubs each operating at capacities greater than 2000
MMcf a day. The market center White River Hub became active during the
past seven years. Located in western Colorado, it is owned by a partnership
between Enterprise Products Partners, LP and Questar Gas Company. The
White River Hub was created to provide natural gas producers in the Piceance
and Uinta basins access to the multiple intrastate and interstate pipelines that
now serve the expanding production fields located within the surrounding
area. The hub operates an 11-mile header system pipeline and offers market
center services to producers and pipelines located primarily in the Piceance
Basin area of western Colorado. Natural gas production in this area of
Colorado increased from 14 percent of total Colorado production in 2003 to
28 percent in 2007, supporting development of the White River Hub (62).

The Cheyenne Hub, located in eastern Colorado, has not only profited from
the increased natural gas production in the Green River Basin that flows
eastward, it has been the destination of a large portion of the natural gas
coming out of the Uinta/Piceance Basin expansion. These new flows into the
 Cheyenne Hub have more than compensated for the one-third decrease in
Wyoming‘s Powder River Basin coalbed methane production, much of which
is directed toward the hub. The Cheyenne Hub began operations in 2000 to
support the growing need for natural gas transportation out of the Powder
River Basin and to provide trading services for eastern Wyoming and northern
Colorado area producers and other market makers (62). Figure 24 shows the
location of the important hubs in the Rocky Mountain region and also the
White River and Cheyenne Hubs.

6.3.4 Storage Sites:

6.3.4.1 Importance:

At the end of the mainline transmission system, and sometimes at its

beginning and in between, underground natural gas storage facilities
provide for inventory management, supply backup, and the access to
natural gas to maintain the balance of the system. There are three principal
types of underground storage sites used in the United States today:
depleted reservoirs in oil and/or gas fields, aquifers, and salt cavern
formations. In one or two cases mine caverns have been used. Two of the
most important characteristics of an underground storage reservoir are the
capability to hold natural gas for future use, and the rate at which natural
gas inventory can be injected and withdrawn (its deliverability rate).
Underground natural gas storage provides pipelines, local distribution
companies, producers, and pipeline shippers with an inventory
management tool, seasonal supply backup, and access to natural gas
needed to avoid imbalances between receipts and deliveries on a pipeline
network (63). Figure 25 shows types of underground natural gas storage
facilities and Figure 26 shows the location of the different storage sites in
US.

6.3.4.2 Owners and Operators:

The principal owner/operators of underground storage facilities are (1)

interstate pipeline companies; (2) local distribution companies (LDCs) and
intrastate pipeline companies, and (3) independent storage service
providers. If the facility serves the interstate market it is subject to Federal
Energy Regulatory Commission (FERC) regulations; otherwise, it is State-
regulated. Owners and operators of storage facilities are not necessarily
the owners of the gas held in storage. Indeed, most working gas held in
storage facilities is held under lease with shippers, LDCs, or end users
who own the gas (64).

6.3.4.3 Natural Gas Storage Sites in Central Region:

 Many of the 49 storage facilities located in the region are used to store
excess production rather than to serve as a supply source for local markets.
Production is stored to allow a stable flow rate despite temporary demand
fluctuations. The region has the Nation's largest storage site, the
Baker/Cedar Creek Field in Montana, with a total capacity of 287 billion
cubic feet (Bcf) and a working gas capacity of 164 Bcf. The total regional
working gas storage capacity (approximately 557 billion cubic feet) is 14
percent of the U.S. total, while daily deliverability from storage is only 6.2
billion cubic feet per day, or 7 percent of the U.S. total (64). Figure 27
shows the natural gas storage capacity for the central region. It shows that
Colorado has 8 depleted gas fields for this purpose. The storage fields in
Colorado and portions of Wyoming service the Denver area through the
Colorado Interstate Gas Company system. The local distribution
companies serving these markets account for about 16 percent of the total
storage deliverability in the region.

6.4 Treatment Plants:

Treatment plants in Colorado near the producing regions handle the job of gas
gathering, treatment and transportation from the area of production. Some of the
companies which work over the gathering and treatment of the natural gas from the
San Juan basin include William Partners L.P, Red Willow Production Company,
Red Cedar Gathering Company. These companies gather and treat gas from all of
the geological formations and coal seams within the San Juan Basin and deliver
high quality, treated gas to Intrastate and Interstate pipelines (65). Figure 28 shows
the concentration of natural gas processing plants in the US. Note the region near
the San Juan Basin.

6.5 Natural Gas Fired Power Plants:

6.5.1 Why Natural Gas Fired Plants:

Natural gas, because of its clean burning nature, has become a very popular fuel
for the generation of electricity. In the 70's and 80's, the choices for most electric
utility generators were large coal or nuclear powered plants; but, due to economic,
environmental, and technological changes, natural gas has become the fuel of
choice for new power plants. In 2009, 23,475 MW of new generation capacity are
planned in the U.S. Of this, over 50% will be natural gas fired additions. Natural
gas fired electricity generation is expected to increase dramatically over the next
20 years. There are many reasons for this increased reliance on natural gas to
generate our electricity. While coal is the cheapest fossil fuel for generating
electricity, it is also the dirtiest, releasing the highest levels of pollutants.
Regulations surrounding the emissions of power plants have forced them to come
up with new methods of generating power, while lessening environmental
damage. New technology has allowed natural gas to play an important role in the
clean generation of electricity (61).
 6.5.2 Natural Gas Fired Plants in Colorado:

Colorado has 14 natural gas fired power plants which operate from 200-700 MW
capacity. All of these plants are within 300-500 miles road distance of operation
of this project. The different plants with their operating capacity are listed below:

6.5.2.1 Front Range Power Project , 480 MW

6.5.2.2 Fountain Valley, 234 MW
6.5.2.3 Limon Generating Station, 134 MW
6.5.2.4 Arapahoe Combustion Turbine Project, 122 MW
6.5.2.5 Blue Apruce Energy Center, 276 MW
6.5.2.6 Plains End, 120MW
6.5.2.7 Frank Knutson, 134 MW
6.5.2.8 Rocky Mountain Energy Center, 608 MW
6.5.2.9 Spindle Hill Energy Center, 270 MW
6.5.2.10 TCP 272, 264 MW
6.5.2.11 Fort St. Vrain, 695 MW
6.5.2.12 Manchief Electric Generating Station, 264 MW
6.5.2.13 Brush IV, 115 MW
6.5.2.14 Rawhide, 260 MW.

These capacites translate to nearly 11,000 to 40, 000 Mcf/day of gas requirement
considering them to be operating at 50-60% efficiency. Figure 29 shows the map
of Colorado with the inverted orange triangles depicting the locations of the
natural gas fired plants and orange stars the location of the market hubs.

6.6 Compressed Natural Gas Stations:

The relative abundance and clean burning characteristics of natural gas make it an
attractive vehicular fuel, especially for urban areas. Compared to gasoline, natural gas
combustion produces less hydrocarbon emission as well as less emissions of sulfur and
nitrogen oxides. Today, there are more than a million NGV‘s operating worldwide.
These vehicles use compressed natural gas at about 3000 psig (200 bar) and ambient
temperature. However, for the same driving range, the size of the CNG vessel is at least
three times the volume of a gasoline tank. Compression to 200 bar necessitates a four
stage compression unit and costly infrastructure (66).

The state of Colorado has several fueling stations of Clean Energy and Xcel Energy
spread over the cities of Arvada, Aurora, Boulder, Denver, Colorado Springs etc (67).
These stations need atleast 80,000 to 90,000 MMcf/d of gas to run around 2000 buses a
day.

6.7 Deciding Potential Customers:

Looking at the above options, there are a few things that can be done with the natural gas
produced from our location. We can sell our natural gas in the following ways:

6.7.1 Sell our natural gas to a treatment plant who will then direct the treated gas to an
interstate or intrastate pipeline.
6.7.2 Treat the gas by sending it to a treatment plant and spend money and then direct it
to an interstate/intrastate pipeline.
6.7.3 Construct a pipeline to be sent to the market/ hub, local distribution companies or
storage companies after spending on its treatment.
6.7.4 Construct a pipeline to the natural gas fired plants or CNG stations. Spend money
on the treatment of the gas before sending them to these customers.

In the first three scenarios, we will end up selling gas at the well head price. On the other hand,
the electric power plants and the stations buy gas from the market hub at a price much higher
than the well head price. If we decide to sell the gas to these customers after treatment via
pipelines, we can be advantaged by selling it to them at higher price than the well head price but
at a price lower than the hub price. So for this project, we plan to have a pipeline from our
production location to the nearest natural gas fired power plant which is aprroximately 300-400
miles away or a CNG station which is also nearly the same distance away. This can be done
since the market for wellhead natural gas purchases is unregulated; that is, producers may
negotiate prices and delivery terms with consumers or with other firms, such as marketers and
LDCs etc, for the sale of their products (68). Another advantage of sending gas to these customers
is that there demands are not season dependent. It remains more or less constant. So our
production team will not have to worry hard on where to store excess gas during off season.

6.8 Pipeline Delivery:

The efficient and effective movement of natural gas from producing regions to consumption
regions requires an extensive and elaborate transportation system. In many instances, natural gas
produced from a particular well will have to travel a great distance to reach its point of use. The
transportation system for natural gas consists of a complex network of pipelines, designed to
quickly and efficiently transport natural gas from its origin, to areas of high natural gas demand.

6.8.1 Pipeline Construction/Infrastructure:

The pipeline network is a complicated system build to efficiently move the gas to the
delivery point. The overall infrastructure demands huge investments in terms of
materials, labor requirements, compressor stations, remote controls for maintaining gas
flow and systems to detect leakage along the way.

6.8.1.1 Pipes:

Pipelines can measure anywhere from 6 to 48 inches in diameter, although certain

component pipe sections can consist of small diameter pipe, as small as 0.5 inches
in diameter. The small diameter pipe is usually used only in gathering and
distribution systems. Mainline pipes or the principle pipelines are usually between
 16 and 48 inches in diameter. Lateral pipelines, which deliver natural gas to or
from the mainline, are typically between 6 and 16 inches in diameter. Most major
interstate pipelines are between 24 and 36 inches in diameter. The actual pipeline
consists of a strong carbon steel material, engineered to meet standards set by
the American Petroleum Institute (API).

Pipelines are produced in steel mills and there are two different production
techniques, one for small diameter pipes and one for large diameter pipes. For
large diameter pipes, from 20 to 42 inches in diameter, the pipes are produced
from sheets of metal which are folded into a tube shape, with the ends welded
together to form a pipe section. Small diameter pipe, can be produced seamlessly.
This involves heating a metal bar to very high temperatures, then punching a hole
through the middle of the bar to produce a hollow tube. In either case, the pipe is
tested before being shipped from the steel mill, to ensure that it can meet the
pressure and strength standards for transporting natural gas (69).

Line pipe is also covered with a specialized coating to ensure that it does not
corrode once placed in the ground. The purpose of the coating is to protect the
pipe from moisture, which causes corrosion and rusting. There are a number of
different coating techniques. Pipes are often protected with what is known as a
fusion bond epoxy. In addition, cathodic protection is often used; which is a
technique of running an electric current through the pipe to ward off corrosion
and rusting (69).

6.8.1.2 Compressor Stations/Equipment:

The natural gas is periodically compressed to ensure pipeline flow, although

local compressor stations are typically much smaller than those used for
interstate transportation. Because of the smaller volumes of natural gas to be
moved, as well as the small-diameter pipe that is used, the pressure required to
move natural gas through the distribution network is much lower than that
found in the transmission pipelines. In addition, Mercaptan is added by the
LDCs prior to distribution. This is added because natural gas is odorless and
colorless, and the familiar odor of Mercaptan makes the detection of leaks much
easier (69).

Basic components of such a station include compressor units, scrubber/filters,

cooling facilities, emergency shutdown systems, and an on-site computerized
flow control and dispatch system that maintains the operational integrity of the
station (70).

Compressor units that are used on a natural gas mainline transmission system
are usually rated at 1,000 horsepower or more and are of the centrifugal
(turbine) or reciprocating (piston) type. The larger compressor stations may
have as many as 10-16 units with an overall horsepower rating of from 50,000
 to 80,000 HP and a throughput capacity exceeding three billion cubic feet of
natural gas per day (69).

Compressor stations are ―pumping‖ facilities that advance the flow of natural
gas. They are usually situated between 50 and 100 miles apart along the length
of a natural gas pipeline system and are designed to operate on a nonstop basis.
The average station is capable of moving about 700 million cubic feet (MMcf)
of natural gas per day. The scope of this project requires transportation of not
more than 100 million cubic feet of gas so the design requirements will be much
relaxed in terms of horse power requirement. The compression of the produced
gas and set up of the paraphernalia can be outsourced to American Gas
Compression Inc. which charges a fixed cost per annum to compress one Mcf of
gas. Based on production and the duration of operation of the project it turns out
to be nearly $ 0.3/Mcf.

Figure 30 shows the location of main compressor stations on the US Interstate

pipeline network.

6.9 Pipeline Specifications:

The flow of gas through pipeline distribution network has been described in the previous
section in literature review and has been elaborated in Figure 31. The pressure of the
flowing gas depends on the diameter of the pipeline and the point of delivery. The pipe
pressure for local distribution companies at the city gate could be as low as 3 psi but the
pressure in the interstate and intrastate pipelines can be as high as 1500 psi to boost the
volume of gas carried.

The quality of gas required and the thermal energy content of gas required have also
been discussed previously. The natural gas to be distributed is typically depressurized at
or near the city gate, as well as scrubbed and filtered (even though it has already been
processed prior to distribution through interstate pipelines) to ensure low moisture and
particulate content.

The typical length of pipelining involved in this project will be 300-600 miles which
include small diametered (<6 inches) gathering lines from the production wells to the
mail line. The mainline from the production site to the end use customer will have 16-24
inch diameter operating at pressure between 500-1000 psi. With these values, the gas
will travel at about 10-20 miles an hour through the pipe.

6.10 Pipeline Costs:

Pipeline construction entails the following costs based on the diameter and length of the
pipe(s) used (71):

6.10.1 Materials cost which account for nearly 25% of the total. It can vary from $50,000 - $
300,000 per inch-mile if diameter varies from 5 to 35 inches.
6.10.2 Labor cost which accounts for the lion‘s share of 40-50% can vary from $200,000 to
$400,000 per inch mile (upper limits) for 6 to 36 inches diameter pipes.
6.10.3 Miscellaneous costs account for 20-30% and can vary from $80,000 to $300,000 per inch
mile.
6.10.4 Right of way costs which are a small fraction, varying between $20,000 to $80,000 per
inch mile.

There are maintenance costs as well for pipeline integrity which are incurred annually.
These can be high as $300,000 per year.

6.11 Pipeline Safety and Regulations:

There are a variety of problems and challenges associated with the operation of pipeline
network. Compressor stations run continuously and are very noisy. Pipelines cut through
forests, farms and residential neighborhoods and even run under rivers and lakes,
disturbing a variety of environments, sometimes in very damaging ways. Pipeline routes
are frequently established through the process of eminent domain. The aging pipeline
infrastructure leads to frequent leaks, which regularly produce explosions that are costly
in property damage and lives lost (72).
Safety parameters require that all pipelines passing through populated areas reduce their
maximum operating pressure. Nominal pipe diameter but increased wall thickness are
common where a line has to be derated for its surroundings (change in external stresses
due to earth or traffic loads) in order to keep the working pressure rating more constant
along the line. Increasing the pipe wall thickness or strength of the pipe will enable the
pipe to withstand a greater pressure between operating and design pressure to adhere to
safety requirements. To address the potential for pipeline rupture, safety cutoff meters are
installed along a mainline transmission system route. Devices located at strategic points
are designed to detect a drop in pressure that would result from a downstream or
upstream pipeline rupture and automatically stop the flow of natural gas beyond its
location. Monitoring the pipeline as a whole are apparatus known as (SCADA Systems
Control and Data Acquisition) systems. SCADA systems provide monitoring staff the
ability to direct and control pipeline flows, maintaining pipeline integrity and pressures as
natural gas is received and delivered along numerous points on the system, including
flows into and out of storage facilities (73).

As far as regulations are concerned, the Federal Energy Regulatory Commission (FERC)
has a major control over the way natural gas transoprtation is handled in United States.
FERC determines the rate setting methods for interstate and intrastate pipeline
companies, sets rules for business practices, and has the sole responsibility for
authorizing the siting, construction, and operations of interstate/intrastate pipelines,
natural gas storage fields, and liquefied natural gas (LNG) facilities (73).

6.12 Future Work:

The application of adsorbed natural gas development for the construction of an onsite
ANG fuel station may be considered. This requires tight control over the sorbent
thermodynamics, mass and heat transfer rates, sorbent packing density, micropore volume,
surface area and other parameters. So far, research has been restricted to laboratories with
very little commercialization of this technology because of uncertainties with involved
costs for the development of a suitable sorbent on a commercial scale. Till date, research
on methane storage has been performed on materials like superactivated carbons, zeolites,
Silica, Metal Organic Frameworkds etc. to be able to meet the DOE target of 180 V/V (V
stands for volume) uptake of adsorbent. This means that a unit volume of adsorbent should
be capable of storing atleast 180 times of methane its own volume. Using such sorbents
will reduce the compression requirement to store gas in cylinders by approximately four
times and hence the reduction in cost is apparent. However, a major cost factor which is
the sorbent development on a commercial scale, has not been explored in great details in
the literature which has been a major limitation to the exploration of the application of this
technology in this project. (66)

However, lietrature reports some overwhelming advances made in this field. Using
corncob waste as a starting material, researchers at the University of Missouri-Columbia
and the Midwest Research Institute in Kansas City have created carbon briquettes with
complex nanopores capable of storing natural gas at an unprecedented density of 180 times
their own volume and at one seventh the pressure of conventional natural gas tanks. This
breakthrough may lead to a flat and compact tank that would fit under the floor of a
passenger car, similar to current gasoline tanks.
The carbon briquettes contain networks of pores and channels (Figure 32) that can hold
methane at a high density without the cost of extreme compression, ultimately storing the
fuel at a pressure of only 500 pounds per square inch, the pressure found in natural gas
pipelines. This would lead to tremendous pressure savings. The low pressure of 500
pounds per square inch is central for crafting the tank into any desired shape, so ultimately,
fuel storage tanks could be thin-walled, slim, rectangular structures affixed to the
underside of the car, not taking up room in the vehicle. It was also discovered that fractal
pore spaces (spaces created by repetition of similar patterns at different scales) are
remarkably efficient at storing natural gas. Researchers are trying to figure out ways of
reducing the cost associated with the development of such briquettes (74).
 7. ENVIRONMENTAL ISSUES:

Some of the major potential environmental issues relating to San Juan Basin, Colorado can be
listed as follows:

7.1 Methane Seepage:

As major portion of San Juan Basin is methane rich region, methane has always leaked to the
surface. Seeps often are easily discovered near water because seeping gas must bubble through
the water to dissipate into the air. Seeps occur all around the San Juan Basin regardless of the
proximity to water. Seeps pose the greatest potential safety hazard and engender the greatest fear
among residents.
Litigators too easily explain the origin of dissolved methane in water wells and methane seeps as
being from coal bed methane operations that lower the hydrostatic pressure and cause large
quantities of gas to be released into the subsurface. Implied in this explanation is the idea that gas
released from a coal bed methane reservoir has easy access to the surface and surrounding
aquifers.
―Gas migration along access paths are provided by wellbore conduits. In the San Juan basin, for
example, well installation practices conducted prior to the 1950s left the production casing
annulus of deep oil and gas wells uncemented across both the shallower Fruitland formation and
overlying strata.
Consequently, when CBM operations began in the 1980s, desorbed gas was free to migrate
vertically from the Fruitland coal along the wellbore annulus and into shallow aquifer horizons.‖
Methane liberated during production could migrate up dip until it emanates from the outcrop or
shallow sub crop, near basin margins where gas seeps emerge along the outcrop belt of
producing coal seams. (75)
―The first documentation of vegetation death due to methane seeps was in 1901, long before
natural gas production began in the area. Methane displaces oxygen, eventually killing affected
trees and grasses. The methane seeping into the soil eventually dissipates into the air. Methane
seeps naturally migrate from one location to another.‖ (76)

7.2 Sound Pollution:

For the coal bed methane development, there are many types of equipment which produce sound
like compressors, pumps or safety valves. Some of the loud and inconsistent sounds produced are
through the safety valves which pop-up when the valve releases gas so that equipment and
surrounding areas are protected from a gas build-up that could become dangerous if contained or
unattended for long periods of time.
Some pumps other than the electric pumps, are used during drilling process which use natural
gas as the fuel whose engine results in louder noise than the electric pumps.
Similarly in the case of compressors, there are electric driven compressors and also gas engine
driven compressors. They can be present on-site or centralized facility. ―The type of compression
and the power source are dependent on the closeness of a well site to centralized facilities and/or
electric power sources. Centralized compression creates the lowest sound impact because it
removes onsite compression at various well locations to one central facility, which can be
located and built to significantly diminish sound. On-site compression utilizing an electric power
source may lower sound impacts, if a well site is not near a central compression facility.
However, some remote locations do not have electric power available to them and must utilize
natural gas.‖ (76)

―On-site natural gas-powered compressors can be equipped with mufflers to lessen the sound. In
appropriate circumstances, sound walls or buildings are sometimes installed to further reduce
sound emissions.‖ (76)

7.3 Water Quality:

In the nearby residential areas of San Juan Basin, people complain about the methane gas in the
domestic water wells in the early 1980‘s and 1990‘s. With this the Colorado Oil and Gas
Conservation Commission (COGCC) began a water testing program to determine what type of
methane is seeping in the water. After some laboratory tests, it was found that the domestic water
contained ―biogenic‖ gas which is caused by a bacteria which is not caused by natural gas
development. ―One third of the methane gas in groundwater was found to have thermogenic gas,
which could be related to natural conditions or development or both. Water separators can
mitigate thermogenic gas problems‖. (76)
Hence the presence of methane in the domestic residential wells can lead to serious health
problems. ―Residents should take precautions to ensure safe drinking water from domestic wells.
San Juan Basin Heath Department and water well contractors can test for water problems. Wells
should be regularly disinfected to guard against bacteria.‖ (76)

7.4 Ground Water Impacts:

Due to the presence of coal seams in the aquifer, the withdrawal of ground water is a major issue
in the San Juan Basin. This affects the landowners and farmers who are benefitted with the use of
groundwater for irrigation, livestock and other household purposes. (77)
―Also due to the seepage of methane gas, the number of shallow domestic wells and springs may
increase. Drought and the gas desorbing effects of the domestic wells themselves, may also
contribute to groundwater impacts, both in terms of quantity and quality of water produced from
domestic wells.‖ (78)

7.5 Coal Fires:

―Partial removal of water from the coal seam near the coal outcrop depressurizes the coal seam
and could leave it in a condition where oxygen could replace water in the coal seam and increase
the risk of spontaneous combustion. The risk of coal fires would increase with additional wells
close to the Fruitland outcrop. Therefore, it is anticipated that the potential for coal fires may
increase but should be mitigated by proper operation of the wells.‖ (78)
7.6 Air Quality:

―There have been questions about natural gas flaring affects to air quality in the area. Reflective
of gas pressure in formations, the flow of gas can be uneven, sometimes resulting in a gas
pressure buildup. Flares safely release gas pressure to avoid a potentially explosive event. Flares
do burn natural gas in the process, but natural gas is one of the cleanest burning fuels in use
today. Infrequent flaring is temporary and transient in nature with insignificant effects to air
quality.

Some on-site gas compressors use natural gas powered engines, producing some air pollution.
However, many compressor engines are equipped with state-of-the-art emission controls. These
emission controls can consist of internal modifications built into the engine or exhaust treatment
utilizing catalytic technology. Both types of controls are very effective at reducing emissions
from 60% to 90%. If a threshold of emissions is exceeded at a given site, the State of Colorado
or the EPA requires permits. When possible, some companies power compressors using electric
motors to reduce air emissions at well sites and at larger facilities.

The overwhelming majority of air pollution in the San Juan Basin is due to automobile exhaust
emissions. The remaining air pollution sources in our area include coal-burning electrical power
plants, road dust, residential wood burning stoves and fireplaces. Recent studies show that
electric power plants that use natural gas instead of coal, dramatically reduce emissions.‖ (76)

7.7 Contamination Of Soil:

Contaminated soil is not an issue in the case of natural gas production facilities due to the
relatively clean nature of methane production. But sometimes the produced water spillage on the
surface can lead to the contamination of soil as the water may contain high amount of TDS. Also
at the areas where there are pumps and compressors, there is an issue of spillage of lube oil while
refilling it on to the required equipments. So for these, proper rules and regulations need to be
issued by the COGCC for proper removal and clean up.

Even though there are not many complaints about the methane gas seepage in the soil, we need
to undertake frequent well tests to guard against the potential of methane leaks.

7.8 Wildlife Impacts:

Wildlife impacts are mainly due to the surface disturbances at the time production. Surface
disturbance associated with CBM development consists mainly of sites and roads for producing
wells, compressor facilities and pipelines. Wildlife is also disturbed by activity but wells are
unmanned and require only minimal visits. Some wells are automated requiring even less activity
that might disturb wildlife. (79)

―In response to increased human activity, equipment operation, vehicular traffic, and noise
associated with all phases of each alternative, wildlife may avoid CBM development and
production activities and displace to other locations. This avoidance would result in the under-
utilization of otherwise suitable habitats. Therefore, the effectiveness of these habitats in
supporting wildlife would be diminished and wildlife distribution patterns would be altered. The
degree of habitat avoidance would vary between species and among individuals of any particular
species.‖ (78)

7.9 Surface Disturbances:

―Natural gas production operations use county and state roads in several ways. The first way
roads are used to transport construction equipment. This is a temporary road use that is limited to
once or twice in the life of a well or facility -- just like construction equipment used for building
a home or commercial facility. Some wells require water trucks to haul produced water to a
treatment plant or disposal well. Depending upon site-specific circumstances, some wells are
connected to a water gathering pipeline system, which eliminates the need for water trucks.

The most common road use is periodic visits to wells by operation personnel. These visits can be
daily (one trip in and one trip out per day), weekly or even monthly. The main purpose for well
visits is to monitor operations such as the production flow of natural gas and checking
equipment. These trips are typically made in one-ton pickup trucks, commonly used by ranchers,
contractors and county personnel.

Many people point out that gas wells utilize heavy equipment during construction, which
damages the road. Heavy construction equipment is only needed during initial construction and
then averages only once every five to ten years and only for a few days. In comparison,
residential construction requires weeks of heavy equipment such as graders, backhoes, cement
trucks, cranes, and lumber trucks.‖ (76)

7.9.1 Traffic:

The industry regularly stresses traffic safety and traffic law obedience. Most companies have
strict policies that severely punish or dismiss employees who disobey traffic laws while
operating company equipment.
 8. RULES AND REGULATIONS:

Any oil/gas reservoirs face the adverse affects of their respective production on the environment
and also the surroundings. In order to reduce these problems to some extent, we need to lay some
rules and regulations and follow them wisely so that we don‘t any further complex the situation
to deal with. Below we present some of the regulations to be placed on each of the activities
taking place in the CBM production in the San Juan Basin. These rules and regulations are
presented keeping the environmental issues in consideration.

8.1 DRILLING, DEVELOPMENT & COMPLETION:

8.1.1 Approval
Before commencing the operations of drilling, one must sign up an application
with the director for a permit-to-drill and get the approval to carry on the drilling
operations.

8.1.2 Distance
All wells shall be so drilled that the horizontal distance between the bottom of the
hole and the location at the top of the hole shall be at all times a practical
minimum.

8.1.3 Permit Display

As a general practice, a permit for drilling should be posted on the rig and should
also specify the number of days the permit is valid for, having the proper approval
from the director concerned with these operations.

8.1.4 Surface Casing

In areas where pressure and formations are unknown, sufficient surface casing
shall be run to reach a depth below all known or reasonably estimated utilizable
domestic fresh water levels and to prevent blowouts or uncontrolled flows, and
shall be of sufficient size to permit the use of an intermediate string or strings of
casings. Surface casing shall be set in or through an impervious formation and
shall be cemented by pump and plug or displacement or other approved method
with sufficient cement to fill the annulus to the top of the hole, all in accordance
with reasonable requirements of the Director. (80)

8.1.5 Underground Water Degradation

The casing program adopted for each well must be so planned and maintained as
to protect any potential oil or gas bearing horizons penetrated during drilling from
infiltration of injurious waters from other sources, and to prevent the migration of
oil, gas or water from one horizon to another, that may result in the degradation of
ground water.

8.1.6 Aquifer Protection

In areas where fresh water aquifers are of such depth as to make it impractical or
uneconomical to set the full amount of surface casing necessary to comply fully
 with the requirement to cover or isolate all fresh water aquifers, the owner may, at
its option, comply with this requirement by stage cementing the intermediate
and/or production string so as to accomplish the required result. If unanticipated
fresh water aquifers are encountered after setting the surface pipe they shall be
protected or isolated by stage cementing the intermediate and/or production string
with a solid cement plug extending from fifty feet below each fresh water aquifer
to fifty feet above said fresh water aquifer or by other methods approved by the
Director in each case.

8.1.7 Flaring of Gas during Drilling

Any gas escaping from the well during drilling operations shall be, so far as
practicable, conducted to a safe distance from the well site and burned. The
operator shall notify the local emergency dispatch as provided by the local
governmental designee of any such flaring. Such notice shall be given prior to the
flaring if the flaring can be reasonably anticipated, and in all other cases as soon
as possible but in no event more than two (2) hours after the flaring occurs.

8.1.8 Requirement to log well

For all new drilling operations, the operator shall be required to run a minimum of
a resistivity log with gamma-ray or other petrophysical log(s) approved by the
Director that adequately describe the stratigraphy of the wellbore.

SAFETY REGULATIONS

8.1.9 Vehicle Distance

The Vehicles of persons which are not involved in drilling, production, servicing,
or seismic operations should be located at a minimum distance of one hundred
(100) feet from the wellbore. Equivalent safety measures shall be taken where
terrain, location or other conditions do not permit these minimum distance
requirements.

8.1.10 Control of fire hazards

Any material not in use that might constitute a fire hazard shall be removed a
minimum of twenty-five (25) feet from the wellhead, tanks and separator.
Personnel shall be familiarized with the location of fire control equipment such as
drilling fluid guns, water hoses and fire extinguishers and trained in the use of
such equipment. They shall also be familiar with the procedure for requesting
emergency assistance as terrain and location configuration permit.‖ (80)

8.1.11 Removal of surface trash

All surface trash, debris, scrap or discarded material connected with the
operations of the property shall be removed from the premises or disposed of in a
legal manner.
8.1.12 ―Air and Gas Drilling
―Drilling compressors (air or gas) shall be located at least one hundred twenty
five (125) feet from the wellbore and in a direction away from the air or gas
discharge line.
All combustible material shall be kept at least one hundred (100) feet away from
the air and gas discharge line and burn pit.‖ (80)

8.1.13 Water Quality

People should be aware of the quality of water being used in their domestic
household purposes as the probability of methane seeping in the domestic water
is higher. If the water is tested to contain methane in high proportion, they need
to take the initiative to complain against the company and force them to take
appropriate steps.

8.2 WILDLIFE RESOURCES PROTECTION

8.2.1 Education
Informing and educating employees and contractors on wildlife conservation
practices, including no harassment or feeding of wildlife.

8.2.2 Mobilization & Demobilization

We need to minimize rig mobilization and demobilization where practicable by
completing or recompleting all wells from a given well pad before moving rigs to a
new location.

8.2.3 Road Transport Limitation

Limiting access to oil and gas access roads where approved by surface owners,
surface managing agencies, or local government, as appropriate.

8.2.4 Trench Construction During pipeline construction for trenches that are left open for
more than five (5) days and are greater than five (5) feet in width, install wildlife
crossovers and escape ramps where the trench crosses well-defined game trails and at
a minimum of one quarter (1/4) mile intervals where the trench parallels well-defined
game trails.

8.2.5 Traffic Control

Reducing traffic associated with transporting drilling water and produced liquids
through the use of pipelines, large tanks, or other measures where technically feasible
and economically practicable. (80)

8.2.6 General Regulations

To minimize adverse impacts to wildlife resources, plan new transportation networks
and new oil and gas facilities to minimize surface disturbance and the number and
length of oil and gas roads and utilize common roads, rights of way, and access points
to the extent practicable, consistent with these rules, an operator‘s operational
requirements, and any requirements imposed by federal and state land management
 agencies, local government regulations, and surface use agreements and other surface
owner requirements, and taking into account cost effectiveness and technical
feasibility. (80)

9. ECONOMIC ANALYSIS
For the economic evaluation, we have obtained the values for various parameters through
different literature reviews which are clearly referenced and for some parameters, we have made
some logical assumptions, the values of which could not be obtained from the literature and are
also mentioned in this part of the report.

9.1 Exploration Costs:

The costs for exploring are neglected as we assume that the land is already explored and
we are working from the drilling process.

9.2 Drilling, Completion & Fracturing Costs:

The base-case capital investments for the production wells for drilling is calculated
depending on the depth of the reservoir. The depth for this part of the San Juan Basin, the
depth is about 3000 ft. The cost for drilling is taken as $100/ft. (81).For the completion and
fracturing, the costs are taken as $1000/month.
So, accounting for each well the investment for the drilling, completion and fracturing would be
about $2 Million.

9.3 Lease Costs:

The lease costs are assumed as $1500/acre. This cost varies according to the price of the
natural gas.

9.4 Administrative Costs:

The administrative costs are taken as 10% of total gas revenue costs. These costs include
the salaries for the employees, workers and other general services.

9.5 Equipment Costs:

According to the EIA data available, the equipment costs for San Juan basin are $912,000
for 10 wells annually. So, for 13 wells we calibrated the costs to be about $1,200,000
annually. (82)

9.6 Operating Costs:

The operating costs for compression are taken as 0.30/Mcf and the pumping costs are
taken as $2/ton. (81). Other additional miscellaneous costs like maintenance costs are
included in these calculations. (82)

9.7 Transportation Costs:

The pipeline transportation costs for capital investment will be based as $20000/acre-
mile. For operations, the costs would be $0.01/Mcf. (81)
The transportation costs are included in the capital costs are included from the fifth year
of production as the break-even obtained for this project is about 7 years. So the
constructions of pipelines are assumed to be started from the fifth year, so that when the
break- even price is obtained we can start transporting gas from the seventh year
onwards.

9.8 Royalty Costs:

This amount is calculated on the basis of the production sale costs. It is assumed to be
12.5% for this project.

9.9 Gas Price:

The present gas price is very much fluctuating with time. However for the 10 years of gas
production, we have obtained the forecast prices which are listed in the Table 20. (83)

9.10 Revenue Costs:

The total gas production from the wells are calculated per year for 10 years which is
listed in the Table 21 and are then multiplied with the respective year‘s forecasted gas
price to get the total Revenue Costs.

9.11 Total Capital Investment & Gross Revenue:

The total capital investment for this project is projected to be about $350,000,000.
According to the production rate obtained after 10 years of operation, the total gas
revenue costs are about $580,000,000. According to the numbers we obtained from the
simulation, we are able to make profit only after 7 years, i.e. the break even time obtained
is about 7-8 years.

9.12 Sensitivity Analysis:

The sensitivity analysis was done for two main parameters of Gas Price and the lease
costs, as these vary very frequently for a particular period of time. The values were varied
from 40% & 20% of the increase and decrease of the present values taken into
consideration and also their percentage increase and decrease were calculated. These are
listed in the appendices section in Tables 22 and 23.
Summary:
The scope of this project included finding out the feasibility of the development of production
design and distribution of natural gas produced from coal bed methane basin on a certain block
area of the North Western region in San Juan basin.
The project planning included drilling rate of 13 wells in one year with one rig and continue the
project for 10 years. From calculations, the break even to recover production costs appears at
about 6-7 year period.

Simulation results proved that the formation was too tight to allow for CO 2 injection. Rather
hydraulic fracturing was tried on all the wells drilled and they show to increase the production of
gas.
Throughout the course of the project, it has been made clear on why effective, safe and economic
disposal of produced water is necessary to sustain the project both physically as well as
environmentally. The best part was transporting the water for the purpose of geothermal power
generation in order to prevent depletion of resource as the nearby area is pretty arid and depends
heavily on ground water as a source of drinking water. Also it was decided to supply water at
minimal rates initially so that exact information about the quality of water can be attained and
from there on cost issues can be worked out. Trucks were decided to be used as the volume of
water considerably reduces after initial requirements are met and also our flow rate is much less
than the industry set limit for the use of pipeline. TDS content is a huge problem in the San Juan
basin hence we selected technologies which provided maximum efficiency and reduced the TDS
content to surface discharge quality. Excessive water was deep injected safely into an
underground reservoir without treatment. Economic analysis of the overall costs involved in
various aspects of the project was thoroughly carried out and is mentioned in our report. Last but
not least once we start making profits and have more money at our disposal we may use the
water for certain benevolent issues such as development of rangelands, water parks, aquatic
habitat etc.
The break even analysis was carried out to evaluate an estimated time when the production
investments made could be recovered. It was decided that approximately two to three years
before this period arrives, investments will be made in terms of treatment of gas and
development of pipelining infrastructure. This would involve selling off the gas produced at the
well head price in the initial recovery period and then after the completion of the transportation
infrastructure, selling it to a natural gas fired plant or a compressed natural gas station at a price
higher than the well head price but lower than the price at which these customers buy gas from
the market centers. The margin or profit would increase by nearly $2-$3 per Mcf of gas.
Targeting such customers would be beneficial since their demands are not goverened by season.
Over the last decade, EIA reports have shown that power plants consume almost a constant
amount of natural gas for their operations.
Although the project economics encourages investors to make investments to harness the coalbed
methane resource in the area that was selected, there were few measures which could not be
practiced due to lack of knowledge and time. Future work to enhance the benefits associated with
this project may include the following:

1. Increasing the number of wells. By changing the amount invested in drilling and the
number of rigs used, the production could be enhanced. The idea here was to look at a
number that was low and yet productive.
2. Refracturing of existing wells was not simulated due to software limitations. However, in
practice, the same wells can be fractured two to three times to enhance production with
the cost being nearly the same.
3. Multilateral Drilling has not been explored in excruciating detail. However, it would be
interesting to understand and apply this method of extraction since it apparently prevents
formation damage and creates greater reservoir exposure through a single well. Gas
production, dewatering and disposal can be combined in a single well with this technique
which makes it economical in terms of preventing large infrastructure and long term
maintenance investments. It also reduces surface disturbances and reduces impact on
environment.
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FIGURES:

Figure 1. Dual Porosity System (84)

Figure 2. Sorption Isotherm-shows gas content versus pressure at constant temperature. (85)
 Figure 3. Production Decline Analysis for a Typical Reservoir.

Figure 4. Response of Pressure versus Time for a Typical Dual Porosity Reservoir.
Figure 5. Hydraulic Fracturing Schematic.
Figure 6. Natural Processing Schematic.
Figure 7. Shown above in the First Picture are the Boundaries of the San Juan Basin in Colorado
and in New Mexico. While below is an Enlarged Portion of the Basin in Colorado with
the Selected Area Highlighted in Area E.
Figure 8. Shows the Five Spot Drilling Pattern for Producer Wells.
Figure 9. Shows Daily Gas and Water Production for Each Well.
Figure 10. Shows Cumulative Gas and Water Production for 13 Wells.
Figure 11. Showing the Impact of Interference from Other Wells.
Figure 12. Block Pressure for each Well for Ten Years
Figure 13. Fracture Pressure and Rate of Injection for San Juan Basin.
 Permeability J (md) 2010-01-01 K layer: 1

File: jai_shri_ram3.dat
0 100,000 200,000 300,000 User: exo913
Date: 4/20/2010

0
0

Scale: 1:763030
Y/X: 1.00:1
Axis Units: ft

2.00

-100,000
-100,000

1.80

1.60

1.40
Well-4 Well-3 Well-7 Well-11
Well-14Well-6 Well-9 Well-12Well-13 1.20
Well-5 Well-1 Well-8 Well-10

-200,000
-200,000

1.00

0.80

0.60

-300,000 0.40
-300,000

0.00 10.00 20.00 miles

0.20
0.00 15.00 30.00 km

0.00
0 100,000 200,000 300,000

Figure 14. Well Distribution and Permeability Change after Fracturing.

Figure 15. Gas Rate for 10 Wells in 10 years.
Figure 16. Cumulative Gas Production for 10 Wells in 10 years.
Figure 17. Cumulative Water Production for 10 Wells in 10 years.
Figure 18. Water Rate for 10 Wells in 10 years.
 Figure 19. Water Production from Simulated Area.

Figure 20. Water Production from a Single Well in Simulated Area.

 180

Water Production (bbl/day)

160
140
120
100
80
60
40
20
0
0 50 100 150
Water Production Time (Months)

Figure 21. Exponential Decline of Water in a Single Well.

Figure 22. Simplified Flow Diagram for Produced Water Treatment.

Figure 23. Natural gas market centers or hubs with respect to natural gas transportation
corridors.
Figure 24. Location of Hubs in Rocky Mountain Region.

Figure 25. Types of Underground Natural Gas Storage.

Figure 26. Location of Underground Storage Sites in US.

Figure 27. Underground Storage Sites for Central Region.

Figure 28. Natural Gas Processing Plant Concentration in US.
Figure 29. Location of Natural Gas Fired power plants (inverted orange triangles) and Market
centers (orange stars) in Colorado.

Figure 30. Compressor Stations on the Interstate pipeline networks.

 Figure 31. An Ideal Natural Gas Distribution Network.

Figure 32. Development of Nanoporous Carbon Material from Corncob waste to Store Methane.
TABLES:

Table 1. Summary of Methods for Recovering Methane from Non-mined areas and
Underground.
Recovery Mine or Non-
Method Description Methane Quality
Efficiency* Mine
Drilled from surface to Recovers nearly pure
Vertical Wells ≤ 70% Mine and Non-mine
coal seam methane
Drilled from surface to a Recovers methane that is
Gob Wells few feet above coal seam sometimes contaminated ≤ 50% Mine
just prior to mining with mine air
Drilled from inside the Recovers nearly pure
Horizontal
mine to degasify the coal methane ≤ 20% Mine or Non-Mine
Boreholes
seam
Drilled from inside the Recovers methane that is
Cross-Measure
mine to degasify sometimes contaminated ≤ 20% Mine or Non-Mine
Boreholes
surrounding rock strata with mine air

Table 2. Removing Contaminants.

Contaminants Problem Solution

Water 1. Reduces calorific value 1. Use of heater treaters
of gas 2. Use of glycol treaters
2. Corrosive in the 3. Use of Dessicants and
presence of acid gas other chemicals
3. Can damage pipeline
and equipment when
hydrates form.
Hydrogen Sulfide (S2O) 1. Can be toxic 1. Use of sulfide
2. Causes corrosion to scavenger
pipelines and other 2. Solid bed absorption
equipments. processes (e.g Iron
3. Reduces calorific value Sponge)
of gas 3. Direct conversion to
sulfur processes (e.g
IFP
Carbon Dioxide (CO2) 1. Can cause corrosion to 1. Ryan Holms
pipes and other Distillation
equipment. 2. Gas permeation
2. Can be dangerous to (Membrane treatment)
health.
3. Reduces caloric value
of gas
 Table 3. Water Production In Some Major Producing Coal-Bed-Methane Areas. (21)

BASIN STATE NO OF AVERAGE WATER/GAS WATER

WELLS WATER RATIO DISPOSAL
PRODUCTION (Bbl/Mscf) METHOD
(BBL/DAY)
Black Alabama 2917 58 0.55 Surface
warrior discharge
Powder Wyoming/ 2737 400 2.75 Surface
river Montana discharge
Raton Colorado 459 266 1.34 Injection
San juan Colarado/ 3089 25 0.031 Injection
New mexico
Uinta Utah 393 215 0.42 Injection

Table 4. Typical San Juan Basin CBM Produced Water Constituents and Concentrations.

CONSTITUENT CONCENTRATION
Sodium 619 mg/L
Potassuim 7 mg/L
Calcium 25 mg/L
Magnesuim 12 mg/L
Carbonate 0 mg/L
Bicarbonate 1920 mg/L
Chloride 18 mg/L
Sulfate 18 mg/L
Nitrite 4 mg/L
Iron 2080 µg/L
Manganese 20 µg/L
Table 5. The Six Most Popular Coalbed Methane Basins within the United States.

Table 6. San Juan Basin Reservoir Properties.

Property Value
Number of coal seams 5 (Area A, B, C, D, E)
Total coal thickness 40-50 feet
Depth 3200 feet
Initial reservoir pressure 1400-1620 psi
Reservoir temperature 120 o F
Coal seam porosity 0.01-0.02
Permeability 1-3 mD
 Table 7. Input Data for Numerical Simulation.

Property Value

Grid top depth 3200 feet

Initial reservoir pressure 1600 psi
Thickness 45 feet

Porosity (matrix) 1%

Permeability (matrix) 0.1 µD

Porosity(fracture) .8%

Permeability(fracture) 2 mD

Temperature 120o F

Fracture spacing(I,j,k) 0.02 feet

Water saturation (matrix) 0.0001

Water saturation (fracture) .99
CH4 molar fraction 0.96
CO2 molar fraction .03
N2 molar fraction .01

Table 8. Thermodynamic Properties of the Components.

Component Pc (critical pressure) Tc (critical Temperature) in Langmuir Langmuir

O
Psia F volume pressure
Constant constant
(scf/ton) (psia)
CH4 667.2 -116.6 450 294
CO2 1069.9 87.9 707.5 151.15
N2 493 -232.4 222 588
 Table 9. General Raw Natural Gas Component make-up.

Table 10. Typical Water Production Rates in San Juan Basin.

Basin No of wells Average water Water: Gas ratio

Production (bbl/MCF)
(bbl/day/well)
San Juan Basin 3089 25 0.03
Data Source: USGS 2000.

Table 11. Water Production Rates from the Simulated Case Study.

Basin No of wells Average water Cumulative Water

(Fruitland Production Production for 10
Formation) (bbl/day/well) yrs
(bbls)
San Juan Basin 130 65 17,000,000
 Table 12. Chemical Composition of Coalbed Water.

SAN JUAN BASIN

PARAMETERS RANGE AVERAGE
pH 6.5 – 9.2 7.8
ANIONS (mg/L)
Bicarbonate 76 to 12,000 596.5
Chloride 19 to 15,000 2,000
Fluoride ND to 20 2.6
Sulfate ND to 650 12.9
METALS (mg/L)
Barium 0.2 to 37 2.78
Cadmium ND to 0.026 0.005
Calcium ND to 620 89
Iron 0.005 to 246 9.8
Lithium 0.18 to 3.3 0.49
Manganese 0.3 to 420 33.1
Magnesium 0.005 to 3.8 0.25
Potassium 0.3 to 24 7.5
Silicon 0.2 to 14 7.3
Sodium 0 to 6800 1905
Strontium 0 to 56 5.8
Zinc 0 to 0.38 0.1
TDS 550 to 26,700 14,700
BOD 100 to 300 20
Hydrocarbon 21 to 62 3

Table 13. Water Requirements for Geothermal Energy Generation.

Water Use Volume Of Water

Required
(bbls)
(bbls)

Fracture 3,1746.03
Requirements

Initial Water For 2,1621.224

Heat Transfer
Fluid

Yearly Makeup 7,891,746.76

Water

Total 7,945,114
Table 14. Water Treatment Process System & Capital Costs for Active Water Treatment.

TREATMENT PROCESS TREATMENT PROCESS UNITS

SYSTEM

Deoiling, Organic removal and Hydrocyclone, FBR w/Sand Filter,

Partial Demineralization Ultra Filtration and Reverse
Osmosis

TREATMENT UNIT COST ($)

Three RO Unit (installed) 2,880,000

Deep Disposal Well and -

Facilities

Three Impoundments 336,400

Three Surface Discharge Points 234,000

Total 3,450,400

Table 15. Annual Operating Costs for Treating Water (For a 130-well unit).

Unit Operation Annual Operating Costs

Electric Power $352,000
Chemicals
Anti-Scalant $73,000
Cleaning $5,000
Iron Removal $3,500
Membrane replacement ( after 5 years $33,500
annualized)
Reject Disposal (10% residual concentrate) -
Annual labor $22,000
$194,200
G & A of 20% $38,800
Total $233,000
 Table 16. Estimated Transport Costs.

Table 17. Projected Transport Costs over a 10 year Operating Period.

Volume of Distance Cost of Number of Total Cost of Cost Of

Water Transportation Trips Transportation Transportation
Transported (Miles) Required
($/Miles/Trips) ($) ($/Bbl)
(Bbls)

7945114 60 1.35 55,608 4,504316 0.567

Table 18. Cost of Deep Injection of Produced Water.

Component Cost ($)

Drilling 600,000

Transporting/Maintenance 960,000

Total Cost 1,560,000

Table 19. Total Cost for Management of Produced Water.

Activity Costs
Active Water Treatment Operating and Maintenance $ 233,000
Capital $ 3,450,400
Transportation $ 4,504,316
Deep injection $ 1,560,000
Total Costs $ 9,747,716
Cost per Barrel $ 0.57
Cost per Barrel per Mcf $ 0.0171
 Table 20. Forecasted Gas Prices for next 10 Years.(83)

Year Gas Price ($/Mcf)

2011 6.5
2012 6.85
2013 6.95
2014 7
2015 7.5
2016 7.75
2017 8.25
2018 8.55
2019 8.875
2020 9.25

Table 21. Total gas production from wells for 10 years.

Year Production(Mcf) Total Revenue Costs ($)

1 1200485 7803153
2 3358365 23004800
3 4450080 30928056
4 5518070 38626490
5 6657235 49929263
6 7820125 60605969
7 8959290 73914143
8 10074730 86138942
9 11166445 99102199
10 12258160 113387980

Table 22. Sensitivity Analyses as per NPV.

% Change Lease Costs($) Gas Price($)

+40 -34,698,742.7 105010306.9
+20 -17,421,671.3 52432853
-40 17,132,471.6 -105299508.6
-20 34,409,543.1 -69,999,126.2
 Table 23. Sensitivity Analyses as per % NPV Change.

% Change Lease Costs($) Gas Price($)

+40 -14.93% 45.20%
+20 -7.499% 22.57%
-40 14.811% -45.32%
-20 7.374% -22.69%