THE ECONOMIC ANALYSIS OF DEEP COAL BED METHANE EXPLOITATION USING PINNATE HORIZONTAL WELL IN UPPER SILESIAN COAL BASIN

Due to growth of natural gas price in Poland, coal bed methane (CBM) may become an important source of energy in Upper Silesian Coal Basin. However, previous attempts of CBM exploitation in that region, using vertical wells, did not give any satisfactory results. This is because the Silesian coal plays have extremely low values of permeability (similar to 1 mD to 1 mD) and fracture porosity. The probability distribution of these parameters was published in many papers, reports and books. Is it possible for exploitation of CBM in Upper Silesian Coal Basin to be profitable, using pinnate horizontal wellbores without hydraulic treatments or ECBM-CO2/N-2 operations? The answer to this question is the objective of this paper. Solving the above-mentioned problem was achieved in two steps. Firstly, based on the literature, the values of geological and petrophysical parameters (and its distribution), characterizing researched coal seams, were determined. Next, using Monte Carlo simulation method, one hundred different numerical models were built. To calculate methane and water production for each of the scenarios, Eclipse300 simulation software was used. Second step was creating an economic model to evaluate project efficiency. The model including factors as: capital expenditures (CAPEX), fixed and variable operational expenditures (OPEX), taxes, estimated income from gas selling and, finally, water utilization cost, was developed for determining the viability of the project. Based on literature, industrial data and American experiences, probability distributions for CAPEX and OPEX were defined. Gas and water rates were imported form numerical simulations. Net present values (NPV) were calculated. Monte Carlo simulation method was used to calculate the economic indicator described above.