Why Are Coalbed Methane Stocks Red Hot

Coal bed methane (CBM) is perhaps one of the last important natural gas resources readily available in Canada. Using the maturing from the Western Canadian Sedimentary Basin, the prospective for elephant sized discoveries has been greatly decreased. Greater all-natural gas costs have also drastically enhanced the economics for CBM exploitation. We at Sprott Asset Management are fairly excited concerning the prospects for businesses with coal bed methane assets so extended as all-natural gas prices stay above $6 per Mcf (thousand cubic feet). The economics will be really skinny under $6.

Properly in Canada, CBM is called the oil sands of all-natural gas. The analogy is the fact that its a very significant resource. The Alberta Energy and Utilities Board has assigned 71 trillion cubic feet of gas in location for Horseshoe Canyon and 239 Tcf of gas in spot for the Mannville coals. These are incredibly large potential resources hot penny stocks. They fit the definition of an unconventional resource: definable in aerial extent, predictable in nature and repeatable. In contrast to the oil sands, that are only located in Alberta, emerging CBM plays exists in lots of locations on the country, which include in Nova Scotia (Stealth Ventures), Southern British Columbia (Storm Cat Exploration), and also in Northern Ontario (Admiral Bay).

StockInterview: Are you able to clarify why absolutely everyone refers to CBM as an unconventional resource, when methane could be the important constituent of conventional all-natural gas

Coal bed methane is known as an unconventional resource, due to the fact it demands various procedures and approaches than the exploitation of all-natural gas from a conventional reservoir. A single such distinction is the really need to fracture the reservoir, often making use of air or nitrogen, due to the lower permeability of coal versus a conventional reservoir. This fracing can frequently be equal to the price to drill a coalbed methane properly, based on the number of coal seams. Also, CBM wells ordinarily come on at lower rates than conventional wells, however have numerous with the identical fixed fees, along with the added fees of fracing and compression. So it tends to make sense that in order for the economics to become equal, the CBM properly would require a greater all-natural gas value.

For the past four years, Horseshoe Canyon (province of Alberta) has been the main sector focus. Horseshoe Canyon coals are pretty much usually dry, are relatively shallow, create sweet gas, and may be drilled with fundamental drilling rigs. The Horseshoe Canyon Trend is generally identified, and exploration threat is relatively minimal. The main danger isn’t no matter whether the coals will include gas, but rather whether or not there is sufficient natural cleating to allow for an economic rate of gas production.

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