With coal bed methane, the gas content per unit volume of coal increases with depth. Pressure is what holds it in the coal. Often, companies drill deeper looking for more gas per unit volume of coal. However, according to Marchioni, The deeper you go, permeability decreases. And it decreases exponentially, not linearly. Theres always a trade-off in any coal basin. Geologists will try to find the depth where they will find optimal gas content and optimal permeability. Of course, the more shallow the depth, where you can find an economic gas deposit, the better for the company and its shareholders.

What do you need to know about risks when investing in coal bed methane gas exploration companies? The risk is permeability and the ability to produce the gas from the coal. Permeability, as Marchioni explained, is the ability for the gas to flow from the coal into the well bore. Coal typically has a set of fractures, a natural set of fractures, in it, he clarified. They can be better or less well developed. It can have minerals in them, for instance. A mineral can be deposited there that can plug between the fractures. Coal, as a substance, has very low permeability. But because it is fractured, it can have good permeability.

We asked Dr. Marchioni point blank about the project Pacific Asia China Energy (TSX: PCE)will soon be drilling on its massive Guizhou project in China, We dont feel theres much risk on the coal being there. We have abundant evidence for that. I dont feel theres very much risk about gas content. Theres a lot of Chinese testing, and even if it is not fully accurate, within the margins of error, youd still have a lot of gas in the ground. We have good control geologically. Much of the place has already been explored for coal. I dont feel much geological risk in that respect.

He cautioned, The risks in any CBM play are: Can you get out of the ground at the right price? What influences that is the permeability of the coal and also the amount of water that is there. Were looking for permeability. Thats what we are trying to measure: If theres water there, can we pump out the water fast enough to reduce the head of water so that we drop the pressure on the coal? Thats basically what we have to do. You have to drop the pressure and allow the gas to bleed off.

And that is what makes this exploration. Everything weve got in terms of water, permeability, and that kind of stuff is coming from coal mines that are very shallow. The slim-hole drilling, over the next several months, should answer many of Dr. Marchionis questions.

Coal Bed Methane Development May Alleviate Pollution & Mine Fatality Problems in China

Chinas the worlds largest producer and consumer of coal. The country also holds 13 percent of the worlds recoverable reserves. Last week, Chinas National Development and Reform Commission (NDRC) reported the countrys coal output jumped by 8 percent to 2.11 billion tons in 2005. The U.S. Energy Information Administration Outlook 2005 projected Chinas coal consumption would grow to 1.81 billion tons by 2015, about one-quarter of the worlds total consumption of coal. Nearly half the coal expected to be consumed in Asia over the next decade will be burned in China. In 2002, the industrial sector consumed about 47 of that coal. As the worlds leading producer of both steel and pig iron, China needs fuel to meet the worlds eager appetite. Together with India, these two countries will represent 71 percent of the forecasted growth in coal consumption over the next decade.

Chinas dependence upon coal comes at a price. The NDRC reported nearly 6,000 died in coal mining accidents in 2005. The World Bank estimates about 400,000 Chinese die each year from air pollution-related illnesses, mainly heart and lung diseases. Not only does China export 24 percent of its coal to other Asian countries, it is exporting its pollution from coal emissions. As much as 40 percent of air pollution in Japan and South Korea originates from China, said Dan Millison, an environment and energy specialist for the Asian Development Bank. Boo Kyung-Jin of the Korea Energy Economics Institute said, South Koreans are increasingly concerned. In spring, everybody is coughing. It is getting worse in recent years. A report in Channel NewsAsia suggested, There is also growing evidence that the pollution has reached North America.