Cipher has just finished helping another client with the process of certification of its reserves and resources. Certification is needed in most cases to raise funds from investors. Cipher acts as the liaison between the client and the 3rd party certification company to insure maximization of those resources and reserves, which of course translates into company value.
A bit of background: when a coalbed methane company has obtained acreage (that is, they’ve been awarded a permit to explore by the government) they usually want to know what is the potential. Actually, most companies will have done an initial internal assessment even before gaining title to an area to make sure it has at least some commercial potential.
The next step is to gain data, if none already exists, on the area. This can be from historic drill holes, coal mines or even outcrop. In green field areas it is important to establish how much coal is there and what is the continuity of those seams or zones.
Certification of resources and reserves usually follow the SPE classification shown in the diagram. There are two types of resources – Prospective and Contingent – and then there are Reserves (see Moore et al., 2009; Moore, 2012 and references therein for a more detailed explanation).
Establishing the presence of coal and its distribution is usually enough to get Prospective Resources booked by a third party certification company. However, to move up to Contingent Resources the gas content needs to be measured, usually through drilling (though in some cases, nearby underground mines – if they exist – can be a source of this data). The permeability of the coal must also be measured to demonstrate that there is potential of commercial gas rates. Finally, to really maximize the amount of resource that is booked, maximum gas holding capacity and gas quality should also be measured.
In order to obtain reserves, sustained gas flow needs to be demonstrated in a pilot well (or wells). This gives a good indication of what the estimated ultimate recovery (EUR) might be in any given coal seam reservoir.
Cipher’s role has been to help the client conduct these internal assessments, and then liaise with the certification company. There are only a hand full of companies who do certifications that are well known to stock exchanges and investors.
The background and experience of Cipher’s Team has helped a number of companies increase their value and gain investment through insuring they get the most certifiable resources and reserves from their permits.
Moore, T.A., 2012. Coalbed methane: A review. International Journal of Coal Geology 101, 36-81.
Moore, T.A., Mares, T.E., Moore, C.R., 2009. Assessing uncertainty of coalbed methane resources, Proceedings, Indonesian Petroleum Association, 33rd Annual Convention & Exhibition. Indonesian Petroleum Assocation, Jakarta, Indonesia, pp. Paper IPA09-G-056, 011 pp.