United States

Environmental Protection Agency

Office of Air and Radiation
6207-J

EPA-430-N-00-004
Fall 2007

COALBm	METHA

A publication of the Coalbed Methane Outreach Program (CMOP)

www.epa.gov/coalbed

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CRAM

Coal Mine Methane
Ownership Issues

As interest in unconventional energy resources and
greenhouse gas emissions increases, recovery
and utilization of coal mine methane (CMM) is ex-
panding. In the U.S. and many other countries, however,
industry lacks a uniform legal framework governing CMM
ownership. As a result, a number of ownership conditions
can serve as barriers to project development. The ques-
tion of who "owns" or has rights to the methane adsorbed
to a particular coal estate does not have a straightforward
answer, in most cases, a coal lease holder does not have
automatic rights to CMM and must work with the gas lease
holder, the surface owner, the government, or a combina-
tion of the three to resolve the issue.

see CMM OWNERSHIP, page 2

NEWS: Power Plant Uses
Ventilation Air as Fuel

In Australia, the first power plant in the world using
coal mine ventilation air methane (VAM) as the
primary fuel is in full operation at the West Cliff Col-
liery of BHP Billiton. Use of this extremely lean fuel is
made possible by a patented combination of emission
control and steam cycle technologies. The solution is
developed by MEGTEC Systems, owned by U.S.-
based company SEQUA Corp. The plant, which con-
verts the energy of coal mine VAM into electricity, offi-
cially opened on September 14. For additional infor-
mation, please view the official press release at http://
bhpbilliton.com/bb/investorsMedia/news/2007/
nswPremierMorrisIemmaOpensWorldfirstPower-
GenerationProjectAtBhpBillitonsWestClifflViine.jsp

U.S. Coal Mine Methane Conference

On-Site Registration Still Available

The 1st Annual U.S. Coal Mine Methane Conference will be held
in St. Louis, Missouri, September 25-27. The 2007 Conference
will feature experts on methane gas recovery from both
government and industry sharing the latest in technology, methods,
and legal issues of CMM recovery through project-based examples
and case studies. The theme of this year's event is Innovative
Developments in CMM Project Opportunities in the U.S. and around
the world.

The agenda is posted on the conference website (http://

www.epa.gov/cmop/cmm_conference.html). Day one will cover
case studies of U.S. projects and technologies. Day two will focus on
international case studies, policy, regulatory, and finance Issues. The
third day is reserved for field visits.

"ONLINE REGISTRATION WILL CLOSE AT 5 PM (EST) ON
WEDNESDAY SEPTEMBER 19th** After this time, registration will be
available on-site. If you have any questions, please contact Jim
Marshall (jmarshall@ravenridge.com) at 970-256-2654.

EPA thanks our sponsors for their generous support.

In this issue...

1 Coal Mine Methane Owner-
ship Issues

1 News: Power Plant Uses Ven-
tilation Air as Fuel

1	U.S. Coal Mine Methane Con-
ference

2	Methane to Markets

5 Coal Companies Hope to Re-
ceive Carbon Credits for
Methane Reductions

8 CBM/CMM News

11 Upcoming Events

Access documents electronically from
the "Documents, Tools, and Re-
sources" pages on our Web site at
www.epa.gov/coalbed

To subscribe to CBM Extra and CBM
Notes, please go to our website
http://www.epa.gov/cmop/mailinglist.html
and register for our mailing list. You
will be added within two weeks.


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Fall 2007
Page 2

COALBED	METHA





ijmiim:
eaaaaxK!

Methane to Markets





JOT

The Registration page for the Methane to Markets
Partnership Expo is live. To register for the
event, you can visit the M2M website

(www.methanetomarkets.org/expo), click on the
registration link in the side bar, and enter your infor-
mation as directed.

In addition, several other Expo pages have been
updated. First, the Location and Travel Info page now
includes more information and assistance to secure a
Chinese travel visa. Second, the Accommodations
page offers access to a hotel reservation form for
Expo attendees to make arrangements at the China
World hotel. Third, full exhibitor and sponsorship in-
formation, including an exhibitor kit and exhibitor floor
plan, is available on the Sponsors page. Fourth, a
detailed draft agenda for the Expo is now available
for download.

The Partnership Expo, which will take place Oc-
tober 30 to November 1, 2007 in Beijing, China, is the
premier international forum for promoting methane
recovery and use project opportunities and technolo-
gies. Join the international methane community and:

¦	Showcase project opportunities and technolo-
gies;

¦	Meet with potential project partners and financi-
ers;

¦	Learn about the latest technologies and ser-
vices; and

¦	Explore key technical, policy, and financial is-
sues

For information about becoming a Sponsor of the
Expo, please visit http://

www.methanetomarkets.org/expo/sponsors.htm
For more information about the Partnership, please
visit www.epa.gov/methanetomarkets.

CMM Ownership from page 1

This article summarizes the CMM ownership conditions
in the U.S. and the obstacles they present for project devel-
opment. The first section discusses CMM resources and
rights on lands controlled by the U.S. Government - the
case in several western states. The second section re-
views the situation on private lands - such as in much of
the eastern U.S. - where ownership of the mineral re-
sources is governed by state laws. Each of the two sections
analyzes the ownership procedures and rules that govern
both the relationship between the surface and subsurface
owners and the relationship between two or more subsur-
face resource owners.

Federal Lands and the Split Estate

When most of the western U.S. was being settled, the
1909 and 1910 Coal Acts were passed requiring home-
steads to accept federal government reservations of any
underlying coal estate, including rights to enter and develop
it. Soon after, the 1914 Mineral Lands Act reserved the oil
and gas estate as well as several other mineral estates for
the federal government. As a result, today the U.S. Bureau
of Land Management (BLM) manages 700 million acres of
subsurface mineral estate.

Multiple Subsurface Resources

The coal and mineral acts were followed by the Mineral
Leasing Act of 1920 (MLA), which clarified that federally-
owned coalbed methane (CBM) is developed under an oil
and gas lease - not a coal lease. As a result, today a de-
veloper on federal lands must hold a gas lease in order to
put a CBM or CMM resource to beneficial use. If a com-
pany holding a coal lease wants to utilize its CMM emis-
sions, for example, it must follow the federal leasing proce-
dures in place for conventional natural gas as prescribed by
the BLM. These procedures involve nominating the area of
interest for lease and then following competitive leasing
procedures. The gas resource is leased to the highest bid-
der that agrees to the conditions of the tender.

Generally, utilization and/or sales of CMM requires a
valid gas lease, regardless of end use. If the leased gas is
used by the mine or mine company, used for power produc-
tion, orsoid to another party, gas royalties must be paid to
the BLM. If no lease is held for the gas, it may only be
vented to the atmosphere for safety purposes as set out by
the Mine Safety and Health Administration (MSHA). The
federal government has waived the gas lease and royalty
requirements in the past if it deems the use of CMM as
beneficial to the government. For example, utilization of


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Fall 2007
Page 3

COALBED METHANE EXTRA

CMM to fuel a coal drying system will increase the value of
the coal, thus increasing the royalty the government may
obtain from coal sales. This use would be considered a
benefit to the government and could be negotiated without
a gas lease in place. Any uses not considered a benefit to
the government are prohibited in the absence of a gas
lease supplementary to the coal lease.

A split estate arises in the event that gas rights are
leased to an entity other than the mining company. When
this happens, situation-specific arrangements have to be
made in order to accommodate both lessees. In the case
of a mine in New Mexico, CBM operators were awarded
gas leases in the same coal seam that a coal operator is
now mining underground. Therefore, the CBM operators
have the right to produce the gas released by mining. This
arrangement can result in problematic - even prohibitive -
conflicts. In the case of this mine, a private agreement be-
tween the coal and CBM operators has been made to ac-
commodate both parties.

Some attempts at clarification have been made by
BLM in areas where ownership conflicts frequently arise.
One such example is the establishment of the Conflict Ad-
ministration Zone (CAZ) in the Powder River Basin (PRB)
in Wyoming and Montana. In 2000, BLM drafted Memo-
randum 2000-081 setting out policy goals to deal with the
conflicts frequently occurring between the large surface
mines in the area and the CBM operators. In 2003, BLM
issued a second memo (Memorandum 2003-053) to es-
tablish CAZs and to optimize the production of both coal
and CBM on federal lands by reducing methane liberation
during surface mining. The CAZ typically covers areas in
the PRB that BLM considers vulnerable to conflict between
CBM and coal development. The CAZ includes areas
west of existing surface coal mines where coal will be
mined within the next 10 years and where CBM develop-
ment is underway or anticipated. Each CAZ is reviewed
annually to adjust its boundary.

Once the CAZ is identified, the CBM lessees or opera-
tors are notified that their oil and gas lease is within the

CAZ and informed of future mining activities. BLM re-
quires the proper and timely development of leased re-
sources, the prevention of waste, and proper abandon-
ment of wells. BLM may offer a royalty rate reduction to oil
and gas lessees and allow wells to be drilled on smaller
acre centers to facilitate uninterrupted coal mining opera-
tions.

To qualify for a royalty rate reduction the oil and gas
lessee must agree to the following:

Expedite CBM production in a manner that will
maximize the recovery of the resource before re-
quired abandonment; and

Cease production operations and abandon wells
and facilities at BLM's request prior to the com-
mencement of mining operations in the area of the
CBM wells.

Another attempt to maximize utilization of federal min-
erals is currently underway in the North Fork of the Gunni-
son River Valley in Western Colorado where federally
owned coal and gas is managed by BLM and the federally
owned surface is managed by the United States Forest
Service (USFS). BLM established the Paonia-Somerset
Known Recoverable Coal Resource Area (KRCRA).

Wthin the KRCRA, coal and oil and gas leasing is man-
aged consistent with land use plans and lease terms with
exceptions as follows:

Where the overburden above the B-Seam of the
Mesa Verde coals is less than 3,500 feet, the re-
sources will be managed primarily for the explora-
tion and development of the coal resource.

Under no circumstances will the BLM approve any
oil and gas operations that compromise maximum
economic coal recovery or the safety of under-
ground mining operations.

Surface / Subsurface

Depending on the specific location of a coal estate,
the overlying surface estate can be controlled by BLM,
USFS, private land owners, state land owners, or another

www.epa.gov/coalbed
www.methanetomarkets.org


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Fall 2007
Page 4

COALBED	METHA



ijmiim:
eaaaaxK!

Federal agency. When the surface rights and subsurface
rights are owned by different parties, it results in a different
sort of a split estate situation. According to BLM, "mineral
rights are considered to be the dominant estate, or take
precedence over, other rights associated with the property,
including those associated with owning the surface. How-
ever, the mineral owner must show due regard for the in-
terests of the surface estate owner and occupy only those
portions of the surface that are reasonably necessary to
develop the mineral estate." (BLM, nd). MLA protects sur-
face owners in the case of a surface and mineral split es-
tate; the "miner" must compensate the surface owner for
damages while the surface owner must provide the min-
eral lessee the right to enter and use the surface of leased
lands (McBride, 2006).

Additionally, if industry expresses interest in a gas
lease on lands where the surface is managed by another
agency, such as the USFS, BLM is required to obtain ap-
proval and recommendations from that surface managing
agency (SMA) prior to placing the lands on a competitive
lease sale notice. An SMA may need to prepare or update
an environmental document, which may require additional
time. An agency such as the USFS will consider issues
such as habitat, endangered species, and effects on water
resources on the lease.

Private Lands

When the western U.S. was being homestead, the
eastern U.S. was already under private ownership. As
disputes between coal, gas, and surface owners devel-
oped, various state laws were established to govern CMM
and CBM ownership. In 1992, the Energy Policy Act pres-
sured states to resolve legal uncertainties over CBM own-
ership and rights to develop. Where possible, common
law rules are generally followed. Today, when interpreting
deeds, contracts, and leases, the goal is to implement the
intentions of the parties, using evidence where necessary.
When split estate property is involved, a number of issues
must be considered to accommodate all parties. One con-
sideration is whether the activities of either the surface or
various mineral estates cause reasonable or unreasonable
interference for the other estate(s) and if such activities
are necessary or incidental.

Multiple Subsurface Resources

Case law resolution is required where the deed or
lease is silent on key issues concerning allocation of multi-
ple subsurface resources. For example, in the Wyoming
Supreme Court case Newman v. RAG Wyoming Land Co.

the value associated with the production of CBM was un-
known to the parties in 1974 when the coal deed was
signed. As a result, the parties had no intent at all with
regard to CBM. The court determined that the right to ven-
tilate gas, which is an essential element of the right to
mine, is not equivalent to ownership (Heiss, 2002). For the
CBM to have been granted in the deed, the court stated
that the mineral must be one that "may be mined or ex-
tracted in association" with the coal or "in conjunction with
coal mining operations" (Ibid). This case looked to the
U.S. Supreme Court ruling of Amoco Production Co, v.
Southern Ute Indian Tribe, 526 U.S. 865 (1999) which ulti-
mately determined that CBM was not reserved with the
coal estate on federal lands.

Similar cases have occurred in other states as well. In
Pennsylvania, U.S. Steel Corp. v. Hoge determined that
the coal estate includes the gas, as hydrofracturing for
CBM recovery would render the coal seam unmineable. In
Alabama, CBM rights are also held by the coal owner as
decided in Rayburn v. USX Corp. and NCNB Texas

see CMM OWNERSHIP, page 7

Summary Table of CBM/CMM Ownership

State

Coal
Lessee

Gas
Lessee

Comment

Alabama

r@l





Illinois

0



In Goal seam or mine
void only

Federal Lands



0



Kentucky



L 0 1



Montana

0





Pennsylvania

0





Virginia



0



West Virginia





Ownership is decided on
a case specific basis
considering language of
deed and original intent
of parties

Wyoming



0



One issue that Methane to Markets Coal Subcommittee members have
identified as a critical obstacle to project investment and development is
uncertainty about CMM ownership in various partner countries, including
the United States. Without a clear understanding of who owns CMM and
how the rights to its profitable utilization can be obtained, projects may
be viewed as too risky to gain support from the investor community. In
response, CMOP is developing a draft White Paper intended to provide
an overview of CMM ownership issues in Partner countries. The final
version of the White Paper will be posted on the M2M and CMOP Web
sites (http://www.methanetomarkets.org and http://www.epa.gov/
coalbed, respectively).


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M

ethane is a major greenhouse gas (GHG), sec-
ond in global impact only to carbon dioxide. Un-
derground coal mining is one of the largest
sources of methane emissions in the U.S. Each year, un-
derground coal mining in the U.S. liberates 2.4 million ton-
nes of coal mine methane (CMM). Of that, less than 30%
is recovered and used (U.S.EPA, 2007b). The global
benefit of CMM reductions can be equated to reductions of
carbon dioxide from sources such as automobiles. For
example, every thousand tonnes of CMM emissions elimi-
nated each year is equivalent to 21,000 tonnes of C02, or
to the removal of 4,600 automobiles from the road.

One of the barriers to CMM recovery and utilization
project development is cost. Drainage, collection, and
utilization systems are complex and expensive to install.
Two coal mines have improved the cost equation, how-
ever, by signing on to earn money for CMM emissions
they are keeping out of the atmosphere. Jim Walter Re-
sources and PinnOak Resources have joined a voluntary
greenhouse gas reduction trading program to turn their
avoided emissions into carbon credits. The example they
set may encourage other coal mining companies to follow
suit - and may bring new projects on line that would other-
wise have not gone forward.

Turning Avoided Emissions into Revenue

Jim Walter Resources (JWR), through Black Warrior
Methane (BWM), has been collecting CMM in advance of
underground operations since 1983. The original intent
was to degas the Blue Creek Coal mine sufficiently to al-
low underground mining without requiring a massive (and
economically undesirable) conventional ventilation effort. It
was quickly discovered that in addition to accomplishing
this task, BWM's operations could produce a market qual-
ity product in the form of virtually pure methane gas.

Today, JWR is one of the leaders in CMM drainage in
the U.S. and around the world. According to EPA data, the
company sells an average of 27 million cubic feet per day
of pipeline quality gas from three mines, preventing 5.5

million metric tons of C02 equivalent (MMTC02e) from
being emitted into the atmosphere each year (U.S.EPA,
2007a).

Besides the benefit of increased mine safety, the posi-
tive economic effects of successful degassing on the min-
ing operations are:

Greatly reduced delays on the face

More widely spaced ventilating shafts and fans

Lower fan horsepower

Smaller and cheaper ventilation constructions un-
derground

In an interview with Chuck Dixon, Vice President of
Engineering at JWR (retired), published in the Fall 2006
CBM Extra, Dixon said that "the people at Jim Walter con-
sider themselves business people that happen to be min-
ing coal." JWR used its business acumen to turn a neces-
sary cost item to the Mining Division into a successful
profit center. JWR applied this same can-do attitude to-
wards turning a potent GHG to an environmental and fi-
nancial asset. As a first step, in December 2006, JWR
joined the Chicago Climate Exchange (CCX). As a lead-
ing producer and exporter of metallurgical coal, steam
coal, furnace and foundry coke, and other coal-based
products, JWR was the first coal company to join CCX.

Wth the Sloss Coke Plant as part of its corporate fam-
ily, JWR is an emitting company with an emission reduc-
tion requirement. Even with the reduction commitment and
given the restrictions above, JWR recognized a viable
business opportunity and joined CCX, concluding that the
economics of producing methane reductions eligible for
CCX offsets are attractive.

PinnOak became the second coal company member
of CCX and is currently implementing methane reduction
practices at least two of its properties. PinnOak Re-
sources is an entrepreneurial coal mining and energy re-
sources group with annual production capacity in excess

If you don't receive our weekly email updates, CBM Notes, go to
www.epa.gov/cmop/experts/update.html to sign-up now!


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Fall 2007
Page 6

COALBED METHANE EXTRA

of 7 million tons of high quality, low volatile metallurgical
coal.

Selling GHG Emissions

The trading program of which Jim Walter Resources
and PinnOak Resources have become members is the
Chicago Climate Exchange (CCX), North America's only
voluntary, legally binding greenhouse gas reduction and
trading program for emission sources and offset projects.
CCX members who emit GHGs make a voluntary but bind-
ing commitment to reduce their emissions by 6% against
an established baseline from 2007 through 2010. Any
member company that is able to reduce its emissions fur-
ther than the required level may sell
its surplus as allowances to other
member companies that miss their
targets or to financial institutions that
trade carbon credits on the CCX or
bank the allowances for future trad-
ing. Carbon credits can also be
earned through direct offset projects,
such as methane collection from
landfills, farm livestock waste, and
coal mines. Typically, offset provid-
ers generate few if any direct emis-
sions yet provide a source for carbon
credits.

ownership rights and environmental regulations compli-
ance. Second, a coal mine must carefully calculate the
amount of emissions is has prevented from entering the
atmosphere by using an approved offsets methodology.
Some traders keep their methodology confidential while
others - such as GE/AES - publish their version for public
consumption. Still others use a third party methodology
like the one being prepared by EPA's Climate Leaders, an
industry-government voluntary partnership that works with
companies to develop long-term comprehensive climate
change strategies for its members. Finally, protocol dic-
tates that a third party must verify these calculations as
sound and accurate.

$4.00

2 $2.50 -

cl $2.00 -

$1.50 -

2004 Q2 2004 Q3

n n

$100

CCX is not the only game in
town. In today's market, U.S. coal	toso

companies that want to commoditize
their CMM emission reductions do
not have to look far for other options.

For example, at least five carbon
trading companies will attend, spon-
sor, or speak at EPA's upcoming U.S. CMM Conference in
St. Louis, Missouri. GE/AES GHG Services, Ecosecurities,
Cameo International, 3 Phases Energy, and Blue Source
are all competing to find active and abandoned coal mines
that can host a methane reduction project - and create
avoided emissions. Even traditional energy companies
such as DTE Energy are becoming major market players.

Of course, several hurdles must be overcome before a
CMM reduction project can be successfully registered as
an offset. First, a coal mine must demonstrate clear gas

2°05 2005Q22°,2LQ3

m ¦- m

US U4

1

7.000,000

8

o
o

4,000,000 c
2

3.000,000

1.000,000

CCX Price and Volume History 2004-2007

Conclusion

Since the CCX opened, both price and volume have
been steadily increasing, as illustrated in the figure above.
It is likely that as carbon credits become more actively
traded on commodity exchanges in the near future, the
value of those credits will continue to increase. This could
serve as an added incentive for coal mines to develop
more CMM recovery and utilization projects in the future.
This could also provide an additional revenue stream for

What do you want to know about?

If you have suggestions or requests for future CBM Extra content, please drop us a line.

Jemelkova.Barbora@epa.gov or Somers.Jayne@epa.gov


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Fall 2007
Page 7

COALBED METHANE EXTRA

otherwise marginally profitable projects. Ultimately, this development - along with many others - will contribute towards
a reduction in GHG emissions,

References

U.S.EPA (2007a): Identifying Opportunities for Methane Recovery at U.S. Coal Mines: Profiles of Selected Gassy Underground Coal Mines 2001-2005
(In Press).

U.S.EPA (2007b): Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2005. EPA 430-R-07-002, April.

What do you want to know about?

If you have suggestions or requests for future CBM Extra content, please drop us a line.

Jemelkova.Barbora@epa.gov or Somers.Jayne@epa.gov

CMM Ownership from page 4
National Bank, N.A. v. West. In both Kentucky and Vir-
ginia, legal precedent dictates that the coal rights are only
for the coal, with no rights to CBM. In Illinois, CBM in coal
seams or mine voids is controlled by the coal estate
(Flanery, 2007). In Montana, Carbon County v. Union Re-
serve Coal Co. determined the oil and gas owner had the
right to recover CBM yet the coal owner had rights to ex-
tract and capture gas incident to safety obligations in actual
mining.

The Circuit Court of McDowell County, West Virginia
determined in Energy Development Corporation v. Moss et
a!., Civil Action No. 98-C-173 (W. Va. Cir. June"!9, 2002)
that a conventional oil and gas lease, such as the ones at
issue, containing the phrase all oil and gas, with nothing
further, does not grant a lessee the right to extract coalbed
methane from the lessors' coal seams. The court deter-
mined that the intent of the parties at the time the leases
were signed governed the interpretation of the leases.

Surface / Subsurface

In instances where surface ownership is private and
subsurface mineral rights are leased or owned separately,
a number of states have enacted surface owner protection
or damage compensation laws. These laws vary from noti-
fication requirements, as in Wyoming, where oil and gas
operators must provide surface owners with 5 days notice
prior to staking or surveying and 30 days notice prior to

commencing operations; to other laws requiring compensa-
tion for any damages or lost agricultural production value
on surface lands. In Alaska, Illinois, Montana, Oklahoma,
Pennsylvania, and Wyoming, the law requires surface own-
ers and mineral operators to develop an agreement be-
tween them to provide for all damages. In Tennessee, the
surface owner must notify the mineral operator of damages
within three years of the damage, such as lost income or
market value of crops destroyed, and may bring an action
in court to determine compensation. South Dakota law is
similar; however, the time period is two years for notifica-
tion and compensation is determined based on a formula
mutually decided upon by involved parties. North Dakota
also requires the mineral developer and surface owner to
agree on compensation terms; however, if the surface
owner rejects the developers offer, the surface owner may
take the developer to court (OGAP, 2005).

Conclusion

As unconventional energy resources become more
attractive, ownership issues between the various estates
involved with CMM and CBM will increase. In the absence
of a federal stance on the ownership of CMM, resolutions
such as the establishment of CAZs in the PRB and the
KRCRA in Colorado, legally tested cases within each state,
and private resolutions between coal mines and gas devel-
opers will be necessary to address this barrier to CMM pro-
ject development. Countries with disruptive ownership con-

see CMM OWNERSHIP, page 10


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Fall 2007
Page 8

COALBED METHANE EXTRA

CBM/CMM News

NDRC Approves the First CBM
Commercial Development Pass-
port — Panzhuang CBM cooperative
project is approved to enter the initial
stage of commercial development.

On July 11, 2007, the China Na-
tional Development and Reform
Commission (NDRC) notified China
United Coalbed Methane Corpora-
tion, Ltd's (CUCBM) and Asian
American Gas, Inc. (AAGI, the parent
company of Sino-American Energy
Inc.) that the Coalbed Methane Re-
sources Development Plan in
Panzhuang, Jincheng Shanxi prov-
ince is in line with China's policies
governing the CBM industry and is
listed in the national Eleventh Five-
Year Plan. NDRC also approved the
initial stage of the Panzhuang CBM
Resources Development Plan, with
an annual capacity of 500 million cu-
bic meters. AAGI is the first foreign
company to obtain NDRC's approval
for CBM commercial development in
the last twenty years. Previous out-
put for the six gas wells reached
300,000 m3/day, and the highest gas
output for a single well reached
70,000 m3/day. Sino-American En-
ergy Inc. and its Chinese partners are
now preparing for the initial stage of
CBM commercial development in
Panzhuang. For more information,
the full press release is available on
the AAGI website http://
www.asianamericangas.com/web/
news.asp?lang=E&id=68&pid=283

Caterpillar Generator Sets Se-
lected to Support Additional Coal
Methane Projects in Shanxi, China

The Sihe Coal Mine in Jincheng
city, Shanxi Province, China, is the
site of the world's largest coal meth-

ane power plant. When fully opera-
tional the project will employ 60 Cat-
erpillar methane-gas-powered gen-
erator sets to create 120 megawatts
of power. Following the success of
this project, Caterpillar has been se-
lected to provide an additional 31
methane-gas-powered generator sets
to produce 54 megawatts of power at
the Cheng Zhuang and Mei Gan Shi
coal mines in the same city in Shanxi
Province. The 3500 series genera-
tors used in these projects are pro-
duced at Caterpillar's Large Engine
Center in Lafayette, Indiana.

The Shanxi Jincheng Anthracite
Coal Mining Group Co., Ltd. is the
project developer for all three coal
methane power plants. Caterpillar will
work closely with its dealer WesTrac
China Limited on product commis-
sioning and ongoing support for these
projects. Methane gas found in coal
seams can be highly volatile and it is
a major cause of underground explo-
sions. Historically the CMM has been
vented into the atmosphere. By cap-
turing the previously vented methane
gas and converting it into electricity,
the Caterpillar generator sets will sig-
nificantly reduce greenhouse gas
emissions, improve mine safety and
increase the capacity of the local
power grid.

More information is available at:
http://www.cat.com/cda/
components/fullArticle?
m=8703&x=7&id=598832

China Launches Largest Coalbed
Methane Liquefying Project

China has launched a coalbed
methane liquefaction project that
boasts the country's largest daily pro-
duction capacity. The project, based
in Qinshui Basin, North China's
Shanxi Province, is expected to pro-
duce one million cubic meters of liq-

uefied coalbed methane daily when
put into operation next January, said
a manager of China United Coalbed
Methane Corp Ltd (CUCBM), the de-
veloper of the project. The production
lines will be completed at the end of
this year. The annual output is ex-
pected to reach 150,000 tons and the
annual sales may hit 200 million cu-
bic meters, the manager said. The
CUCBM manager said that Hong
Kong-listed China Leason Investment
Group Co Ltd signed a liquefied coal-
bed methane purchasing contract
with the company in Beijing earlier
this month. Coal mine methane is
usually removed during mining in or-
der to avoid gas explosion accidents.
A proper use of the gas would not
only make the best use of resources,
but also help reduce greenhouse gas
emissions. CUCBM, held by China
National Petroleum Corporation and
China National Coal Group Corp, is
the only company entitled to cooper-
ate with foreign companies to exploit
coalbed methane resources. Its coal-
bed methane drills make up to 85
percent of the nation's total. It has
signed 21 production sharing con-
tracts with 10 overseas companies,
with a total foreign investment of
US$119 million. For more informa-
tion, see the China Daily- August 12,
2007

http://www.chinadaily.com.cn/
bizchina/2007-08/121
content_6022821 .htm

India Proclaims First Coalbed
Methane Sale

Great Eastern Energy Corp., a
London-based company involved in
the exploration, development and
production of coal bed methane
(CBM), said it has made India's first
sale of CBM. The sale is for both
industrial use and compressed natu-
ral gas for vehicles in Asansol, West
Bengal, 125 miles northwest of Cal-


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Fall 2007
Page 9

COALBED	METHA



cutta. The company said it is receiv-
ing $13-15/Mcf for the gas.

Great Eastern has drilled 23 pro-
duction wells and plans to drill 80
more in phases over 3 years. It holds
a CBM license on 210 sq km in the
Raniganj coal field in West Bengal,
where consulting engineers esti-
mated original gas in place at 1.92
trillion cubic feet (Tcf). For more in-
formation, go to http://
www. newswi re .ca/e n/re leases/
archive/July2007/16/c6636.html

Cathay Oil & Gas Ltd. Acquires
Rights to Pakistan Coal/Coalbed
Methane and will Participate in
Joint Countrywide Natural Re-
source Exploration Project

Cathay Oil & Gas Ltd. has ac-
quired the exclusive rights to coal bed
methane and groundwater in the
Pakistan province of Sindh, estimated
at up to 21 Tcf of recoverable natural
gas. In addition, Cathay Oil and Gas
Ltd is part of a consortium of entities
including Pakistan and U.S. Govern-
ment organizations and academic
groups that will conduct a multi-year
countrywide aerial and land based
exploration program. Pending fund-
ing, Cathay will have the right to de-
velop additional natural resource dis-
coveries including coal, coal bed
methane, oil, and minerals. Cathay is
currently in advanced discussions
with potential funders. Cathay has
signed a six year exclusive right to
explore for and develop the coal and
associated coalbed methane (CBM)
and water resources in the province
of Sindh. With this contract, Cathay
controls one of the largest known
coal resources in the world containing
over 10% of the world's total coal re-
serves, more than 175 billion tons as
defined by the USGS. The Thar coals
are known to be the western exten-
sion of the coals in the Cambay Basin

in India, which have reserves of some
13 Tcf of coalbed methane gas. Ca-
thay's area of interest covers some
135,000 square kilometers (roughly
50,000 square miles). The USGS has
estimated that the Thar coal field,
roughly 20% of Cathay's license, is
comparable to the Powder River Ba-
sin of the western United States, and
may contain up to 36 Tcf of coalbed
methane with up to 21 Tcf potentially
recoverable. Unlike China, where
foreign companies must partner with
the state-owned China United Coal
Bed Methane on a 60% company /
40% CUCBM ratio, under the unified
jurisdiction in Pakistan, Cathay owns
100% of the rights and has no re-
quirement to production share with
any company. Cathay has also nego-
tiated regulations and royalty agree-
ments for CBM with the Sindh Gov-
ernment. For more information, see
Cathy Oil & Gas Ltd. (press release)
-August 8, 2007

http://www.marketwire.com/mw/
release.do?id=758815

Gazprom Successfully Completes
CBM Pilot Study in Kuzbass

In early June 2007, Gazprom -
Russia's biggest company and the
world's largest natural gas producer-
announced the successful completion
of a pilot coalbed methane (CBM)
production project in the Taldinskaya
area of Kuzbass Basin. The project,
located in the Kemerovo Oblast, aims
to provide a reliable gas supply to the
Kuzbass region while improving
safety at coal mines. The availability
of gas in the area will also assist in
reducing the ecological footprint of
the industrial region. The first phase
of the project included engineering
design and infrastructure develop-
ment. Pilot wells were constructed,
and they are currently in opera-
tion. During 2007-2008 the project
participants plan to implement a sec-

ond phase of the project, which will
focus on addressing the lack of a
regulatory framework for CBM pro-
duction. Gazprom plans to begin
supplying gas to customers in the
second half of 2009.

Gazprom and the Kemerovo
Oblast Administration inked the
agreement for the CBM production
project in May 2003. The Kuzbass
basin is favorable to CBM develop-
ment because of its well-developed
infrastructure and proximity to the
Kemerovo Oblast's large industrial
centers. Gazprom estimates CBM
reserves in Russia of 49 trillion cubic
meters (Tcm) with 13 Tcm located in
the Kuzbass region. In the first quar-
ter of 2007 Gazprom and Siberian
Coal Energy Company (SUEK) an-
nounced their intention to combine
their electricity and coal opera-
tions. If successful, the merger would
combine Russia's largest gas pro-
ducer with the country's largest coal
producer. SUEK produces about 30
percent of domestic coal and about
20 percent of exported coal for power
generation. See the Gazprom press
release for more information:
http://www.gazprom.com/eng/
news/2007/07/24659.shtml

New Company Develops Methodol-
ogy for CMM Projects

On July 25, 2007, GE AES
Greenhouse Gas Services, LLC
(GGS) - a new joint venture company
formed between AES and GE Finan-
cial Services - published a methodol-
ogy to provide guidance in calculating
emission reductions from the capture
and destruction of coal mine methane
(CMM). GGS will use the methodol-
ogy to create methane emission re-
ductions through investment in pro-
jects and to participate in emission

see CBM/CMM NEWS, page 10


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CMM Ownership from page 7

ditions can learn from others who have found success. Initiatives such as
the Methane to Markets Partnership provide an ideal forum for the trans-
fer of knowledge and experience. ©

References

BLM (nd): Solid Minerals - Coal, U.S. Department of the Interior, Bureau of Land Manage-
ment, Solid Minerals Group, http://www.blm.gov/nhp/300/wo320/coal.htm
BLM (nd): U.S. Department of the Interior, Bureau of Land Management, Best Management
Practices, http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/
best_management_practices/split_estate.html
Dyer and Taylor (2005): Methane Leasing on Federal Lands, 2nd Western States Coal Mine
Methane Recovery and Utilization Workshop, Grand Junction, Colorado, presented by
Desty Dyer of BLM and Ryan Taylor of USFS.

Flanery (2007): Coalbed Methane Legal Issues in 2007, North American Coalbed Methane

Forum 2007, Pittsburgh, Pennsylvania, presented by Sharon O. Flanery.

Heiss(2002): "Mineral Reservation Interpreted by Wyoming Supreme Court to Include
Coalbed Methane." Rocky Mountain Mineral Law Foundation Mineral Law Newsletter.
Volume XIX, Number 4, 2002.

McBride (2006): Legal and Regulatory Issues Affecting Ownership & Development of Coal-
bed Methane, 7th Annual SRI CBM Conference, Denver, Colorado, presented by Law-
rence G. McBride.

OGAP (2005): Oil and Gas at Your Door? A Landowner's Guide to Oil and Gas Develop-
ment, Second Edition, Oil and Gas Accountability Project, July 2005, Available online:
http://www.earthworksaction.org/pubs/LOguide2005book.pdf
USDA (2005): Chapter 8: Response to Comments, Dry Fork Federal Coal Lease-by-
Application, August 2005.

Address inquiries about the Coalbed Methane
Extra or about the USEPA Coalbed Methane
Outreach Program to:

Pamela Franklin

Phone: 202-343-9476
E-mail: franklin.pamela@epa.gov

Barbora Jemelkova

Phone: 202-343-9899

E-mail: jemelkova.barbora@epa.gov

Jayne Somers

Phone: 202-343-9896
E-mail: somers.jayne@epa.gov

Our mailing address is:

US Environmental Protection Agency
Coalbed Methane Outreach Program, 6207J
1200 Pennsylvania Avenue, NW
Washington, DC 20460

Visit our Web site at:

www.epa.gov/coalbed
www.methanetomarkets.org

CBM/CMM News page 9

credit transactions within a market that it is helping to cre-
ate. A GGS standard of practice was also published to lay
out the rules for creating, verifying, marketing, and auditing
the entire process.

The methodology references international standards
including: ISO14064-2: 2006 GHG Project Standard;
UNFCC consolidated methodologies for coal mine methane
ACM0008 v.3; WRI/WBSCD GHG Projects Protocol; and
the IPCC Guidelines for National Greenhouse Gas Invento-
ries. GGS's standards address issues that are unique to
the U.S. economy and standards of practice while main-
taining the rigor of the international standards. The GGS
methodologies incorporate guidelines for determining base-
line emissions, and stringent monitoring protocols for me-
tering and measuring flow that conform to commonly ac-
cepted standards developed by third parties such as the
Society of Mechanical Engineers (SME) and the American
Petroleum Institute (API).

The President of GGS will present on this topic at
EPA's U.S. CMM Conference taking place in St. Louis, Mis-

souri, from September25-27, 2007. You can access more
conference information on our website:
http://www.epa.gov/cmop/cmm_conference.html.

BP Formalizes Plans To Explore For Coalbed Methane

The coalbed methane exploration that British Petro-
leum has talked about undertaking in southeastern British
Columbia, to the alarm of some Montana officials, is now a
formal proposal. British Petroleum has asked the provincial
government to grant a permit for exploration in the British
Columbia side of the Flathead River basin and in the prov-
ince's Elk River drainage. The transboundary Flathead
River system extends into Montana, and a fork of the sys-
tem serves as Glacier National Park's western boundary.
Montana officials have expressed concern that coal-bed
methane work north of the border could lead to environ-
mental harm, particularly to a stateside area valued for its
recreational opportunities and for wildlife that include en-
dangered or threatened species, including grizzly bears,
lynx and bull trout. Sen. Max Baucus, D-Mont., recently
called on BP to halt plans for coal-bed methane work north
of the border. For more information, see: Associated Press
-August 9, 2007

http://www.kxmb.eom/News/151371 .asp C?


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Coal Marketing Days

20-21 September 2007

Omni William Penn Hotel

Pittsburgh, PA

Contact: James Gillies

Phone: 781-860-6110

Email: james_gillies@platts.com

USEPA Coalbed Methane Outreach Program -
U.S. Coal Mine Methane Conference

25-27 September 2007

Millennium Hotel

St. Louis, MO

Contact: Mr. Jim Marshall

Email: jmarshall@ravenridge.com

Website: http://www.epa.gov/coalbed

2007 Rocky Mountain Unconventional Gas Conf.

10-12 October 2007

South Dakota School of Mines and Technology
Rapid City, SD
Phone: 605-394-2693

Website: http://www.sdsmt.edu/learn/professional

Commonwealth of Virginia Energy & Sustain-
ability (COVES) Conference

16-18 October, 2007

Virginia Military Institute

Lexington, VA

Phone: 540-464-7740

Email: bangja@vmi.edu

Website: http://www.energyvacon.org/

Methane to Markets Partnership Expo

30 October-1 November 2007
China World Hotel
Beijing, China

Website: http://www.methanetomarkets.org/expo

North American Coalbed Methane Forum

30-31 October, 2007
Lakeview Resort
Morgantown, West Virginia
Email: khaminian@mail.wvu.edu

China Coal & Mining Expo 2007

6-9 November, 2007
National Agricultural Exhibition Hall
Beijing, China
Phone: 852-2881-5889

Website: http://www.chinaminingcoal.com/2007/
index.php

9th Annual Unconventional Gas Conference

14-16 November 2007

Telus Convention Center

Calgary, Alberta

Phone: 403-770-2698

Email: conference@emc2events.com

Website: http://www.csugconference.ca/

Managing the Social and Environmental Conse-
quences of Coal Mining in India: 1st International
Conference

19-21	November 2007
New Delhi, India
Phone: +91 326 2206372

Email: s_gurdeep2001@yahoo.com
Website: http://www.mining.unsw.edu.au/

2008 AAPG Annual Convention

20-23	April 2008
San Antonio, Texas,

Call for Abstracts Deadline: September 27, 2007
Program themes include Hydrocarbons from Shale &
Coal

Website: http://www.aapg.org/sanantonio/

If you don't receive our weekly email updates, CBM Notes, go to
www.epa.gov/cmop/experts/update.html to sign-up now!


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