Gazprom submitted proposals to the Russian Federation Government on the measures to boost coalbed methane (CBM) production.

The document underlines that non-conventional hydrocarbon resources development, CBM inclusive, is a way of the feedstock base replenishment in the global gas industry. Russia’s coal basins are estimated to contain up to 84 trillion cubic meters of potential undiscovered CBM resources. The Kuznetsk Basin (Kuzbass) and the Pechora Basin are most promising for CBM production.

Pursuant to the Russian Federation President instructions, Gazprom takes active part in the innovative CBM production project in Kuzbass. This February Gazprom was the first Russian company to launch gas production from coal beds in the Talda CBM field. Exploration and appraisal activities are underway in another promising area of Kuzbass – Naryksko-Ostashkinskaya.

It is necessary to improve the regulatory and legal framework in order to raise investment attractiveness of the CBM projects featured by high capital intensity, which is also confirmed by the international practice.

Gazprom believes that a top-priority measure is to categorize CBM as a new kind of natural resource through adding the “Natural Gas (Methane) from Coal Beds” entry in the Russian Classified Index of Natural Resources and Underground Waters.

Tax incentives in the form of a zero tax rate for this natural resource production may become the next stage of the regulatory and legal framework improvement and the basic means of state support.

The measures proposed by Gazprom will give an impetus to CBM production development in Russia, considerably expand the feedstock base of the national gas industry and significantly increase the operational safety in coal mines through lower CBM emissions.

Background:

The Talda CBM field is situated in the central part of Yerunakovsky geological and economic region of the Kuznetsk Basin within the Novokuznetsk and Prokopievsk regions of the Kemerovo Oblast, 65 kilometers north of Novokuznetsk. The field’s C1+C2 gas resources account for 45.8 billion cubic meters as was approved by the Russian Federation Ministry of Ecology and Natural Recourses in May 2009.

In 2005 Gazprom created a scientific testing site in the eastern part of the Talda field in order to develop the CBM production technology. The researchers from Gazprom promgaz created Russia’s first CBM production technology there. 31 international and Russian patents were received across the entire process cycle from CBM exploration to  utilization. Two-thirds of the equipment items used during the pilot project execution were made in Russia.

In 2009 pilot operation of seven exploratory wells was launched at the first pilot production area of the Talda field. Gazprom dobycha Kuznetsk, a wholly owned subsidiary of  Gazprom is the license owner.

In February 2010 Gazprom initiated Russia’s first coalbed methane (CBM) production project in the Talda field. Russian President Dmitry Medvedev took part in the launching ceremony.

During the plateau period, annual CBM production in Kuzbass is planned to reach some 4 billion cubic meters, with a subsequent increase to 18–21 billion cubic meters in the long term so as to meet gas demand in other Western Siberia’s southern regions.