ECONOMIC FEASIBILITY OF ENHANCED COALBED

METHANE (ECBM)
Jiachen Su, Shujuan Wang, Huiling, Tong, Changhe Chen
Key Laboratory for Thermal Science and Power Engineering of Ministry of Education,
Department of Thermal Engineering, Tsinghua University, Beijing, 100084, P.R. China
86-10-62788668 (e-mail: wangshuj@tsinghua.edu.cn)

ABSTRACT
In recent years, enhanced coalbed methane recovery with CO2 injection is identified as an option for
reducing CO2 emission that may be applied in a less costly or even profitable way. The economical
feasibility of CO2 sequestration in coalbed layers combined with enhanced coalbed methane production
in Qinshui Basin, Shanxi Province under current natural gas market conditions in China has been
explored. The economic analysis includes two parts: first, the cost of CO2 capture, compression,
transport, injection and the investment of injection wells, production wells, O&M for producing
competitive gas production are calculated based on the data from the field test at South Qinshui Basin;
second, the influence of cost parameters, discount rate and the ratio of carbon dioxide injected to
incremental methane produced on the CBM price is investigated. In the last section the amount of
CBM and storable CO2 in China are evaluated. The analysis suggests that ECBM may be economically
feasible at carbon dioxide supply costs of up to ￥518/t and may become very competitive with natural
gas when a bonus for CO2 sequestration is applied of about 500￥/t. Although this analysis is based on
a particular gas field, the approach is general and can be applied to other gas fields. This economic
analysis demonstrates that ECBM can be feasible and that a field pilot study of the process should be
undertaken to test the concept further.

KEY WORDS
Enhanced Coal Bed Methane, CO2 sequestration, Economic analysis

1. INTRODUCTION

In recent years, as a backstop option for meeting CO2 reduction targets CO2 geological storage has
gained more and more attention. It is not realistic for China, a developing country, to reduce CO2
emission by geological storage without any benefits. CO2 sequestration for enhanced methane recovery
from underground coal layers, which increases methane recovery and reduce CO2 emissions
simultaneously, is a more realistic way for China.
Previous work on ECBM has been done in the United States’ San Juan basin and preliminary results
[1]
show a 75% increase of coalbed methane production after full field development. In ECBM
production schemes, CO2 is injected in coal seams and displaces the sorbed methane present on the
internal surface of coal layers. Theoretically two molecules of CO2 can be sequestered for every
[2]
released molecule of methane . This implies that coal layers can serve as net carbon sinks and net
energy producers simultaneously. Most work on ECBM in China is on the level of mechanism and
laboratory experiments. The first field test is located in Qinshui Basin, Shanxi Province in China,
which provides the basic data in this study. The purpose of this study is to investigate the economic
feasibility of ECBM under current natural gas market conditions in China. In the analysis, the capital
costs and operating costs for CO2 injection wells, CH4 production wells, CO2 capture, and CO2
transportation are estimated. These costs are offset by the production of CH4, the price of which is
compared to the current natural gas price. The reduction of greenhouse gas emission is the long-term
benefit we get from ECBM, which is analyzed in the study also.

2. ECBM PRODUCTION

2.1 ECBM production process

The process of ECBM is depicted in Fig. 1 which shows the separation and compression of CO2 from
industrial sources, injection into a natural gas reservoir, enhanced production of CH4, and the beneficial
use of the CH4 as a fuel.

Electricity CO2 Separation

Flue gas
generation and compression

CO2
CBM
Coal layer

Fig. 1 Schematic of ECBM process

CO2 adsorbs more easily to coal matrix than CH4 (CH4 is the major content of CBM, more than 90%).
Therefore, injected CO2 decreases the partial pressure of CH4, meanwhile, displaces and desorbs the
CH4. Consequently, more CBM is desorbed from the coal matrix and the CBM recovery rate increases.
The injection well and the production well can be drilled at the same time, or the injection well can be
drilled after the production wells undergo primary recovery beyond the peak CH4 production rate. The
former has the advantage of quicker CBM production and CO2 storage, while the latter delays the
investment of the injection well. Because of the existence of coals layers which are undersaturated with
methane due to a degassing in geological history, CO2 injection can be continued for many years after
terminating CBM production.

2.2 Field test in Qinshui Basin [3]

The first field test is located in Qinshui Basin, Shanxi Province in China. The schematic of well pattern
for ECBM is given in Fig. 2. The cubical five-spot set-up with one injection well in center and four
production wells surrounded is more commonly adopted.
 Fig. 2 Schematic of well pattern in test field

The key values used for the economic feasibility analysis from the test field are given below:
1) The whole project duration is 11 years and the first year is construction period.
2) Injection of CO2 is at a constant rate of 22,653 m3/ d, and injection period is from 5.6783 to 11
year since the gas production begins. The net storage amount of CO2 is 7.2 × 107 kg.
3) The whole production amount of CBM is 3.1 × 107 m3, and the annual production is given in Table
1.

Table 1 Annual production of CBM

year 2 3 4 5 6 7 8 9 10 11

production/
0.455 0.455 2.727 1.819 2.272 2.5 7.5 5.455 4.545 3.273
× 106 m3

4) From the amount of CO2 injected and CBM produced, we can calculate the volumetric CO2/CH4
ratio, which means for each CH4 produced, 1.2 CO2 is injected.

3. ECONOMIC FEASIBILITY ANALYSIS

The price of natural gas currently is between 0.7-2.0 RMB/m3. Costs of CBM should be compared with
those price ranges to evaluate its competitiveness. Based on capital costs of production and injection
wells and the assumed CBM price (the same with natural gas), the injection costs of CO2 is calculated.
The net present value (NPV) method is used for the economic analysis.

3.1 Cost-Benefits analysis

 Table 2 Parameters for economic analysis
Separation
Cost of CO2 Compression
transportation
drilling
Field distribution system
Production well Power system
cost Land use
O&M
drilling
Field distribution system
Injection well Power system
Land use
O&M
Production of CBM
benefit
Reduced greenhouse gas emission

The injection and production well are drilled simultaneously and finished in the first year of the project,
so the investment for injection and production well is made before the first production year which is the
second year of the whole project. Production wells usually produce large volumes of water, so the
production gas needs separation and purification, the cost of which is not taken into account in this
study because of the small production scale. Capital costs are listed in Table 3. All data is from the field
test.

Table 3. The estimation of the cost for production and injection wells
cost
Unit Cost Total Cost
Cost Item Units
(million RMB) (million RMB)
CBM production
Capital investment
Drilling and equipment 2 4 8
Field distribution system 0.4 / well 4 1.6
Power system 0.3 / well 4 1.2
Land use 0.12 / well 4 0.48
Total 11.28
Capital investment
O&M 4 0.1128
×1％
CO2 injection
Capital investment
Drilling and equipment 3.8 1 3.8
Field distribution system 0.4 / well 1 0.4
Power system 0.3 / well 1 0.3
Land use 0.12 / well 1 0.12
 Total 4.62
Capital investment
O&M 1 0.0462
×1％

Current natural gas price in China is: for citizens, 1.5-2.0 RMB/ m3, for electricity generation, 1.0-1.3
RMB/ m3, industrial use, 0.7-1.5 RMB/ m3. If CBM market can compete with the natural gas market,
the CBM price should be lower than the natural gas. The CBM price is assumed to be 2.0 RMB/ m3 to
calculate the cost of CO2.
Fig. 3 shows the annual costs and benefits. The discount rate is assumed to be 6%.

benefits

CBM annual benefits

1 2 3 4 5 6 7 8 9 10 11(year)

O&M

costs

CO2 annual injection costs

Fig. 3 Annual benefits and costs

When the CBM price is assumed to be 2.0 RMB/ m3, the resulting CO2 cost is 518 RMB/ t, which
means if the CO2 cost is lower than 518 RMB/ t, ECBM production is profitable.
Fig. 4 presents the breakdown of investment and maintenance costs for wells and costs for the injected
CO2. The costs for the injected CO2 represent the largest share of the total CBM production costs.
 production wells
investment
29%

CO2 cost
production wells
56%
O&M 2%
injection well
investment
12%
injection well
O&M 1%

Fig. 4 Breakdown of the costs for CBM production

3.2 Comparison between production with and without CO2 injection

According to field test, the production of CBM without CO2 injection in the same period is 10.9 × 107
m3. Table 4 shows the annual CBM production without CO2 injection.

Table 4 Annual CBM production without CO2 injection

year 2 3 4 5 6 7 8 9 10 11
Production
amounts/ 0.455 0.455 2.727 1.819 2.272 0.909 0.909 0.455 0.454 0.446
6 3
×10 m

There is no injection wells investment without CO2 injection, thus the NPV is 3.51 million RMB at the
assumed CBM price of 2.0 RMB/ m3. Though ECBM method enhances the CBM recovery, the high
CO2 costs makes ECBM less attractive than original CBM production method without CO2 injection.
However, when a bonus for CO2 sequestration is applied, e.g. by means of a carbon bonus on the
emission of CO2, CBM production costs drop sharply. CO2 costs from different type sources and the
influence of the CO2 cost on the CBM price are analyzed below.

3.3 CO2 supply, cost and carbon bonus analysis

The prerequisite of operation of ECBM is a steady supply of CO2. Larger point sources and those with
a high CO2 concentration in flue or exhaust gases are of most attrative. CO2 emitted by some chemical
plants, such as hydrogen production facilities, is in a pure form. Flue gas from power generation
contains 6-21 wt% CO2. Before CO2 can be injected, it needs to be concentrated, compressed, and
transported. For CO2 concentrating, different physical and chemical processes are available. Chemical
absorption using amines (MEA) is commercially the best option for low concentration gas flows[4].
CO2 costs consist of the investment for capture and compression system, the energy demand for capture,
compression, drying and cooling, and the cost of operation and maintenance. Generally the lower
concentration of CO2, the higher capture cost is. Key CO2 emitting categories are shown in Table 5.

Table 5 CO2 costs from different sources [4]

CO2
Typical load Capture CO2 total CO2 Cost
concentration
(h/ y) method (Mt/ y) ( / tCO2)
(%)
Power plants
Pulverized coal boiler 4000－8000 21 MEA 18 35-50
IGCC 8000 13 MEA 1.3 40
Gas fired
conventional steam 500－4500 15 MEA 7.9 45-60
cycle
Gas fired combined
5000－8000 6 MEA 11 45-60
cycle
Gas turbine with
7000 6 MEA 1.0 45-80
exhaust boiler
Steam turbine 600－8500 15 MEA 0.5 45-80
Waste incineration
8000 17 MEA 3.1 40-50
Chemical plants
NH3 8200 100 / 2.1 4-5
H2 8200 100 / 1.1 4-5

CO2 is transported from a supply source to an injection location by means of a pipeline. The pipe
diameter is depending on the transported quantity and the distance, and the pipeline investment costs
are built up from material and construction costs, which are the function of the distance and diameter [5].
Table 6 shows several typical values for the costs of CO2 transport in relation to capacity and distance.

Table 6 costs for CO2 transportation[4]

distance
Volume
50 km 300 km
（Mt/ year）
diameter（m） （ / t） diameter（m） （ / t）
0.1 0.10 9.2 0.15 66
0.5 0.20 2.6 0.30 21
1 0.25 1.5 0.35 12
5 0.45 0.5 0.65 4.7

The costs for CO2 separation, compression and transportation can change in a large range depending on
different point sources, different separation method and different transport distance. Generally speaking,
the wellhead price of CO2 is 40 -70 RMB/ t from the chemical plants with high concentration CO2; the
wellhead price of CO2 is higher from power plants and waste incineration, about 400 -500 RMB/ t; the
wellhead price of CO2 is highest from combined cycle, about 500 -800 RMB/ t.
Given the result beforehand, if the CBM price is assumed to be 2.0 RMB/ m3, the highest natural gas
price in current market in China, CO2 price should be under 518 RMB/ t. In fact, to make CBM price
more competitive, CBM price should be lower than natural gas price, which means CO2 price 518
RMB/ t is the limit that is acceptable. Though the point sources such as power plants and waste
incineration are acceptable at the CO2 price of 518 RMB/ t, CBM market is less competitive compared
to the natural gas market. Only those point sources with high concentration of CO2 such as chemical
plants have a commercial future, which increases the difficulty to find a reasonable CO2 supply and
adapt ECBM technology. The new technology should be developed or CO2 transport network should be
set up to decrease the costs of CO2. Under current CO2 capture technology, when a bonus for CO2
sequestration is applied, CBM production costs drop sharply and ECBM technology become very
attractive. Fig. 5 shows the influence of the CO2 price, carbon bonus on the CBM price.

2.2
2
1.8
1.6
CBM price￥/m3

1.4
1.2
1
0.8
0.6
0.4
0.2
0
0 100 200 300 400 500 600 700 800
CO2 price￥/t(Y is carbon bonus￥/t)
Y=0 Y=100 Y=200 Y=300
Fig. 5 Influence of the CO2 price, carbon bonus on the CBM price

(1) If the CBM price is assumed to be 2.0 RMB/ m3, and the carbon bonus is 283 RMB/ t CO2, the
resulting CO2 price is 800 RMB/ t, which means under current CO2 capture technology, all CO2
point sources listed above are acceptable.
(2) If the CBM price is assumed to be 2.0 RMB/ m3, the carbon bonus should be 82 RMB/ t CO2 to
make the same NPV with the original CBM technology.
(3) If the CBM price is assumed to be 0.7 RMB/ m3, the lowest price of natural gas in current market,
and the carbon bonus is 877 RMB/ t CO2, the resulting CO2 price is 800 RMB/ t, which means
under current CO2 capture technology, all CO2 point sources listed above are acceptable. If the
carbon bonus is 600 RMB/ t CO2, the resulting CO2 price is 524 RMB/ t, which means most of
CO2 point sources are acceptable and it is easier to adapt ECBM technology.
(4) If the CBM price is assumed to be 1.0 RMB/ m3, a more reasonable price and a more competitive
price to natural gas price, and the carbon bonus is 740 RMB/ t CO2, the resulting CO2 price is 800
RMB/ t, which means under current CO2 capture technology, all CO2 point sources listed above are
acceptable. If the carbon bonus is 440 RMB/ t CO2, the resulting CO2 price is 500 RMB/ t, which
means most of CO2 point sources are acceptable and it is easier to adapt ECBM technology.
 It can be seen whether the ECBM technology is profitable or not under current CO2 capture
technology, from the economic point of view, depends clearly on the carbon bonus given for CO2
sequestration.

3.4 Sensitivity analysis

The sensitivity of CBM production costs to variations of the CO2 price, the investment costs, and the
discount rate, is shown in Fig 6.

2.3

2.2

2.1
CBM price￥/m3

1.9

1.8

1.7
-20% -15% -10% -5% 0% 5% 10% 15% 20%
Variation of costs
total investment costs production wells investment
injection well investment CO2 price
discount rate

Fig. 6 Influence of investment costs, CO2 price, and discount rate on CBM price

As Fig. 6 suggests, the CO2 costs strongly influence the costs of ECBM, which means the key to make
ECBM more attractive and make CBM price more competitive is to decrease the costs of CO2, and set
up CO2 transport network. The total investment is also a key factor to CBM price, which itself is
dominated by the drilling costs. There is no agreement in the world on whether ECBM needs a specific
drilling technology or which drilling technology is the optimist. The significant uncertainties in drilling
costs therefore have a large influence on the certainty with which the CBM prices can be assessed.
The volume ratio for the idealized case is approximately 2.0, which is CO2:CH4 = 2:1. In fact, this ratio
is likely to vary from field to field, based on reservoir architecture and field operation strategies. The
ratio in the field test in Qinshui Basin is CO2:CH4 = 1.2:1. Fig. 7 shows the influence of volume ratio
CO2/CH4 on CBM price using volume ratio values of 1.2, 2.0, 3.0.
 2 economic
economic economic
CBM price/￥/m3 1.7 uneconomic
uneconomic
uneconomic
1.4
1.1
0.8
0.5
-300 -100 100 300 500
CO2 price/￥/t

1.2:1 2.0:1 3.0:1

Fig. 7 The influence of volume ratio CO2/CH4 on CBM price

If the volume ratio CO2/CH4=1.2:1, and the CBM price is assumed to be in the same range with the
natural gas price, 0.7-2.0 RMB/ m3, the CO2 price varies from -80-518 RMB/ t, which is in the range of
the CO2 supply price analyzed above. However, if the volume ratio CO2/CH4=2:1 or 3:1, the CO2 price
is lower than 150 RMB/ t, even totally in minus value area, it is hard to find appropriate CO2 supply
sources. It seems that CO2/CH4 should be reduced to improve ECBM economics, but considering the
effective payment for carbon sequestration involved in the future CO2 market and the benefits from the
reduction emission of greenhouse gas, the direction of future technology development should be
decreasing the CO2 cost and injecting more CO2.

4. CONCLUSIONS

The economic feasibility of using CO2 for the production of CBM in Qinshui Basin is investigated. The
advantages of ECBM lies in two aspects: first, it offers CO2 storage by adsorbing CO2 in deep coal
layers, which are not suitable for mining or the production is decreasing to meet the target to reduce the
emission of greenhouse gas; second, the injected CO2 drives and displaces CH4 adsorbed on the surface
of coal matrix to enhance the CBM recovery.
A maximum CBM reserve of about 14,340 billion m3 is stored in coal layers up to a depth of 2000 m in
China. 12,910 billion m3 can be explored if the CBM recovery is assumed to be 90%, which is a
reasonable assumption according to the situation in the United States. The annual production of natural
gas in China is 50 billion m3. If the ECBM supply the same amount of CBM with the amount of natural
gas every year, the explored CBM can supply the clean energy for 260 years in China. As the demand
for clean energy is increasing, the CBM market is very attractive.
If the volumetric ratio CO2/CH4 is 2:1, the CO2 storage potential could be about 51Gt for exploring
12,910 billion m3 CBM. The storage potential should be compared to the annual CO2 emission of the
China: about 0.83 billion tonne. So, theoretically the total CO2 emission of China could be stored in
coal layers for nearly 60 years.
Considering the natural gas price, the CBM price is acceptable based on the current CO2 supply price,
but not competitive. The first key factor in CBM production costs is CO2 costs, so the key point to
make CBM price more competitive is to decrease the CO2 cost. The improvement of technology for
CO2 separation, disposal and transport, and the CO2 transport network on a large scale are available.
The second key factor in CBM production costs is investment on both production and injection wells
which mainly depend on the drilling costs. The improvement of drilling technology, the drilling
experience and the expanding development scale are favorable to decrease the drilling costs.
In any case, ECBM should have to be evaluated on a field-by-field basis considering different reservoir
properties and conditions. The analysis in this study is based on an idealized situation, for example, the
ignorance of water and production gas disposal. For these reasons, the results of this study must be
considering limitary and need to be revised according to the specific field test. Nevertheless, the results
in this study suggest that ECBM may become economically feasible under certain conditions and gives
a general concept about the influence of cost items on CBM price.

ACKNOWLEDGEMENT
The authors express their thanks for Roger Olesen, professor of Department of Foreign Language,
Tsinghua University, who gave some advices for the modification of the paper.

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