The Coal Bed Methane Market size is forecast to reach US$16.5 billion by 2027, after growing at a CAGR of 5.5% during the forecast period (2022-2027). Coal bed methane (CBM) is a form of natural gas that is commonly found in coal seams or coal deposits. Coal bed methane is formed during the process of coalification by transforming plant material into coal. It can be considered a clean energy source of natural gas. It is also used as a clean-burning fuel (also known as compressed natural gas) for multiple industrial and domestic uses. It is used for a wide range of applications which include power generation, transportation, manufacturing, and other similar applications. According to NES Fircroft, the Rio Grande LNG project, worth around US$ 15 billion, is currently undergoing development under its subsidiary Rio Grande LNG. The feed gas pipeline is expected to be built and operated by the end of 2023. An increase in demand from the power generation sector along with an increase in natural gas projects acts as the major driver for the market. On the other hand, environmental issues associated with the extraction of coal bed methane are most likely to confine the market growth.
Coal Bed Methane Market COVID-19 Impact
There is no doubt that the COVID-19 lockdown has significantly reduced construction and production activities as a result of the country-wise shutdown of construction sites, shortage of labor, and the decline of supply and demand chain all over the world. Studies show that the outbreak of COVID-19 sharply declined oil and gas production in 2020 due to a lack of operations across multiple countries around the world. However, a slow recovery in new development and production activities has been witnessed across many countries around the world since the end of 2020. For instance, Australia announced its Scarborough Gas Project and Pluto LNG (Liquefied Natural Gas) Expansion worth US$ 11 billion to be resumed since 2020. The facility was built with a targeted capacity of 4-5 mtpa, which will be responsible for developing the gas from the Scarborough field, located 270km off the coast of Western Australia.
In this way, a slow and steady increase in natural gas production activities will require the use of coal bed methane since it is used as a clean energy source of compressed natural gas for multiple domestic and industrial purposes. This will eventually lead to a steady recovery of the market in the upcoming years.
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Coal Bed Methane Market Segment Analysis – By Application
The power generation application held the largest share in the Coal Bed Methane Market in 2021 and is expected to grow at a CAGR of 5.8% between 2022 and 2027, owing to the increasing demand for coal bed methane as a clean-burning fuel (also known as compressed natural gas) for thermal power generation projects. Tata Power, a leading power company, announced the commencement of a 4000 MW thermal power project near Mundra Port, in Gujarat, India in 2021. This project is expected to meet 2% of India’s overall power needs. Furthermore, the government of UAE invested around US$ 550 million for the construction of a 1,026.3 MW combined power plant in Al Layyah, Sharjah as a part of the expansion of the existing 896 MW power plant. The expansion consists of two thermal energy recovery boilers, two gas turbines, and one steam turbine. The project is expected to be completed by the third quarter of 2022. Since coal bed methane is increasingly used as a source of energy, it is primarily used as an alternative to natural gas in gas turbines for power generation projects. Hence, an increase in thermal power generation projects is expected to drive market growth during the forecast period.
Coal Bed Methane Market Segment Analysis – By Geography
North America held the largest share in the Coal Bed Methane Market in 2021 up to 34%. The consumption of coal bed methane is particularly high in this region due to its increasing demand from the natural gas production projects in the region. For instance, the government of the USA announced the continuation of operations of the Alaska LNG Liquefaction Plant project worth US$ 43 billion in 2020. The Alaska LNG represents a three-train liquefaction plant, gas treatment plant, an 800-mile pipeline. The facility is expected to export around 3.5 billion cubic feet of gas per day from Alaska’s North Slope gas fields and is scheduled to begin its operations in 2025. Likewise, another project called Cameron Liquefaction Plant worth US$ 10.2 billion located in Louisiana, USA, started its operations in 2020. The facility was built with a total capacity of 14.95 million tons per annum from three liquefaction trains.
In this way, a slow and steady increase in natural gas production activities will require the use of coal bed methane since it is used as a clean energy source of compressed natural gas for multiple domestic and industrial purposes. This, in turn, will lead to market growth in the upcoming years.
Coal Bed Methane Market Drivers
An increase in demand power generation sector is most likely to increase demand for the product
Coal bed methane is primarily used as a clean-burning fuel (also known as compressed natural gas) for thermal power generation projects. In 2019, the Florida Public Service Commission approved the commencement of a combined project for the development of two new gas-fired power plants in order to meet the future power demand of cooperative electric consumers. Seminole Electric Cooperative is responsible for the construction of a new 1.1 GW plant in Putnam County, which is expected to start its services by end of 2022. Meanwhile, Shady Hills Energy Center is responsible for building a new 573 MW natural gas facility in Pasco County. Likewise, in 2019, the Comision Federal de Electricidad (CFE), a state power utility company of Mexico, approved the construction of three natural gas-fired power plants with an overall capacity of 1720 MW. Increasing thermal power projects are expected to aid the growth of the market. Hence, an increase in thermal power projects will also increase the demand for coal bed methane as it is increasingly used as a source of energy, or as an alternative to natural gas in gas turbines for power generation projects, thus, resulting in the growth of the market in the upcoming years.
An increase in natural gas projects is most likely to increase demand for the product
According to a recent study published on NES Fircroft in 2021, Driftwood LNG LLC, an American company is currently developing an LNG production and export terminal worth US$ 15.5 billion in Louisiana, USA. The first phase of LNG production is scheduled to be completed by 2023 and become fully operational by 2026. In February 2021, operations of the North Field LNG expansion project worth US$ 28.75 billion began in the Qatar peninsula. The expansion project of North Field is expected to increase the LNG production capacity of Qatar from 77mtpa to 110mtpa. The project is scheduled to be completed by the end of 2026. In August 2021, operations of the Basra Gas Gathering Project worth US$ 17.2 billion began in Iraq. The project is expected to produce 2 billion cubic feet of natural gas per day and it is scheduled to be completed in 2025. Increasing demand for natural gas production is expected to increase the demand for coal bed methane as it is primarily used in the production of LNG gas. This, in turn, is expected to accelerate the market growth in the upcoming years.
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Coal Bed Methane Market Challenges
Environmental issues associated with the extraction of coal bed methane can cause an obstruction to the market growth
In order to extract coal bed methane high amount of water needs to be removed from the coal seam to effectively remove any substantial quantities of methane. This increases the risk of polluting the groundwater. Run-off is a major concern during this process since water is produced in large volumes and needs to be disposed of safely. Another issue associated with the extraction of this kind of methane is the potential risk of an increase of methane in the atmosphere. Furthermore, methane migration is another potential environmental concern as the movement of methane may have contaminated groundwater sources in some areas and have a possibility of migrating into residential areas as well. Hence, all of these problems associated with the extraction of coal bed methane may confine the market growth.
Coal Bed Methane Industry Outlook
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the market. Coal Bed Methane top 10 companies include:
Exxon Mobil (XTO Energy)
BP PLC
ConocoPhillips
Australia Pacific LNG
Shell (QGC)
Santos
Anglo Coal
Arrow Energy
AAG Energy
G3 Exploration
Recent Developments
In September 2021, Coal India Limited (CIL) signed an agreement worth INR 1,880 crore (US$ 254.2 million) for the extraction of coal bed methane. The project is divided into three phases. The first phase of exploration includes two years of duration, followed by the pilot phase of three years. The third phase is the production phase which includes 30 years.
In March 2021, ExxonMobil submitted a proposal to conduct a pilot project for hydraulic fracturing or fracking in Colombia. Developing non-conventional energy deposits such as fracking for shale gas and coal bed methane is highly diverging in Colombia and commercial development of such deposits is strictly prohibited currently. Hence, fracking pilot projects in Colombia are proposed in order to obtain adequate scientific information so that informed decisions can be made regarding the future development of non-conventional energy deposits.
Key Takeaways
Power generation application in Coal Bed Methane Market is expected to see the fastest growth, owing to the increasing demand for CBM in the thermal power generation projects.
Coal bed methane is an alternative form of natural gas that is found in coal seams or coal deposits. It is a clean-burning fuel (compressed natural gas) that can be used for both domestic and industrial purposes.
North America dominated the Coal Bed Methane Market in 2021, owing to the increasing demand for CBM from the natural gas production sectors of the region. In October 2021, the US Federal Energy Regulatory Commission (FERC) approved appeals to increase the authorized LNG production at the Sabine Pass and Corpus Christi LNG terminals. The terminals will increase their LNG production by optimizing operations, including production increment, modifications, and maintenance.
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