New Drilling Technology Could Finally Make CBM Very Economic
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New Drilling Technology Could Transform the Economics of CBM
Introduction
Mitchell Drilling has revolutionized the coalbed methane (CBM) industry with its Dymaxion drilling technology in Australia, reportedly extracting gas at just $1.10 per thousand cubic feet (mcf). With over 250 successful wells in Australia, the company is now exporting this groundbreaking technology worldwide.
The Global Reach of Dymaxion
Sprott Asset Management's CBM analyst, Eric Nuttall, highlighted the economic challenges of CBM development, which are feasible only when natural gas prices exceed $6 per mcf. However, with Mitchell Drilling's cost-effective solutions, the game is changing. The company has expanded its operations to India, drilling between 30 to 50 wells, with plans for 70 more. They've also ventured into Kansas, completing their first CBM well, and have partnered with Pacific Asia China Energy to bring Dymaxion to China.
Mitchell Drilling's Journey
Founded by Peter Mitchell in 1969, the company began by drilling water wells during a drought in Queensland. As the coal industry boomed, Mitchell transitioned to drilling for oil, gas, uranium, and coal reserves. In the 1990s, major U.S. oil companies sought CBM fields in Australia but found shallow coal seams too costly to exploit. Mitchell capitalized on this by leveraging smaller rigs traditionally used for water wells.
The Birth of Dymaxion Technology
Political mandates in Queensland requiring coal-fired power stations to use gas sparked growth in the CBM sector. Mitchell devised a solution by integrating vertical wells with horizontal drilling techniques. This innovation allowed for gas production from seams previously considered nonviable, even when natural gas prices were low.
How Dymaxion Works
Mitchell’s Dymaxion technology combines vertical and horizontal wells, creating a conduit for coal seams to efficiently release gas and water. This approach has transformed CBM extraction, enabling operations in areas with low gas content to yield substantial returns. Mitchell boasts production costs below $1.25 per mcf, offering impressive profit margins when gas prices are higher.
Expanding Horizons
Mitchell Drilling's first test of the Dymaxion technology in 2000 proved successful, leading to global expansion. The company targets collaborations instead of simply offering contract services, particularly in promising markets like China and India. Their partnership with Pacific Asia China Energy enables a cost-sharing arrangement in China, where the demand for safer and more efficient CBM extraction is critical.
Conclusion
The demand for cleaner energy solutions is driving interest in CBM worldwide. Mitchell Drilling’s cutting-edge technology not only promises to redefine industry standards but also ensures safer mining operations in countries like China. As global energy needs evolve, Mitchell Drilling is poised to lead the CBM sector into a new era of economic and environmental viability.
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