Much to the surprise of many in the oil and gas industry, Virginia is the site of one of the most successful coalbed-methane (CBM) projects in the U.S. Consol Energy Inc. is the dominant operator in the Old Dominion State. The Pittsburgh-based company currently produces 156 million cubic feet of gas per day from some 1,800 wells, virtually all of that flowing from its Virginia CBM play. In addition, the firm is involved in a conventional shallow-gas play in the state, through a 50/50 joint venture with CNR LLC, a subsidiary of Charleston, West Virginia-based Triana Energy. Small gas volumes are also produced by Consol in the northern Appalachian Basin and Tennessee. The company acquired most of its CBM properties when it bought out a Virginia coal-mining operation in 1993. Initially, Consol sold off portions of the associated gas rights, but it bought them back in 2000 and 2001. Today, the Valley CBM play encompasses Nora and Oakwood fields in Buchanan and Dickenson counties, between the towns of Grundy and Richlands. Consol operates two underground mines that extract Pennsylvanian coals in the area of its CBM leasehold. The Buchanan and the VP-8 mines both produce low volatility, metallurgical-grade coal from the Virginia Pocahontas seam. This coal contains from 350 to 600 standard cubic feet of gas per ton. "It's an extremely gassy coal seam," says Thomas Hoffman, vice president. "Purely from a mine safety standpoint, we were compelled to deal with the gas." Consol developed a number of techniques to produce the gas, and these blossomed over time into a prolific, profitable CBM play. Today, Consol is the second-largest gas producer in the Appalachian Basin. In 2003, the company drilled 188 wells; in 2004, it expected to drill about 289 wells. Of that total, 265 were slated for Virginia-175 CBM wells, 65 gob wells and 15 conventional gas wells. Gob wells make gas from thinly bedded coals that are part of the collapsed rubble left after mining. Proved reserves currently stand at 1 trillion cubic feet of gas, with another 364 billion cubic feet (Bcf) of probable reserves in Virginia. The company's CBM leasehold in the Valley play encompasses about 278,000 acres. During 2003, it made 121 million cubic feet of gas per day from a proved developed CBM reserve base of 353 Bcf, an unusually high ratio of production to reserves. "It is the coexistence of mining and gas development that has made us a very efficient gas extractor." Consol notes that it uses four methods to produce its CBM gas. The company drills vertical wells that are fracture-stimulated; gob wells that are placed in the rubble behind the mining operations; horizontal wells; and long-hole wells. It drills horizontally from inside the mine into the block that it is planning to mine, and 180 degrees in the other direction, out into the perimeter of the coal reserve. The laterals extend 4,000 to 5,000 feet in the target seam, which is about 5.5 feet thick and lies about 1,800 feet below the surface. Initially, Consol was drilling its vertical wells just a few months ahead of its mining approach. Now the CBM wells are planned for lives of about five years. "We have wells that will produce gas for a long time before we mine through that part of the seam." Consol's operations give it a unique perspective: as it mines through an area, it can observe the effectiveness of its frac techniques as well. Another novel feature is that its gob wells produce as much as a third of its gas volume. "We can't hedge 100% of our expected Virginia production, because the gob gas rates depend on the rate at which we are mining." Operating in the Appalachian carries several strong benefits, notes Hoffman. There are fewer permitting issues compared with those encountered on federal lands in the western U.S.; the transportation infrastructure is well developed and accessible; and, the basin's proximity to the nation's main gas markets ensures premium pricing. "We're a 140-year-old company, and we have a lot of gas rights in our asset base. We used to think of gas as a waste product that needed to be disposed of. Now, we are firmly in the gas business, and we are particularly interested in shallow-gas plays in Appalachia."
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