Proactive Investors brings you a summary of some of the major stories on the Australian Securities Exchange.
Coal bed methane companies set to capitalise on increased demand for cleaner energy
Coal bed methane (CBM) could provide an alternative source of cleaner energy for global markets in years to come.
With the emergence of coal bed methane as a viable source of energy, the fossil fuel may make something of a comeback in 2011.
Most investors will be familiar with shale gas and oil plays, and their virtues - and more often than not their frustrations.
However, coal bed methane is an alternative and generally lower risk source of unconventional gas.
Coal bed methane production is well established in parts of Australia and North America, but what exactly is coal bed methane?
There is more than one potential fuel source to be found down the pit, as the canary in the coal mine once confirmed.
When coal seams formed millions of years ago gases such as methane were caught between the layers of carbon that ultimately formed in deposits.
With modern technology, resource companies can now unlock this largely untapped source of fuel using special extraction techniques, which are designed to draw the methane to the surface.
To produce coal bed methane, a well is drilled into the coal seam, often horizontally.
After a period of de-watering, the pressure in the immediate area drops which then forces the trapped gas to flow up to the surface.
Generally, there are two fairly straightforward rules-of-thumb that apply to most coal bed methane wells.
First, to produce a lot of gas the well must be in contact with a large area of the coal seam – this is why wells tend to be drilled horizontally.
Second, a long de-watering period will generally provide a higher flow rate once the well begins production - this is the result of relative change in pressure.
Below we look at four of the coal bed methane plays that are leading the way on Australia's ASX market.
Dart Energy Exploration (ASX: DTE)
Dart Energy is focused on the development of CBM as the company believes the fuel's successes in North America and Australia can be replicated, or even surpassed, in Asia and Europe.
Dart has a market capitalisation of A$484.81 million and in the past six months its shares rose 53% to a high of $1.395 in October from 0.745 in July. DTE shares are currently trading at $1.17.
CBM has been proven a viable energy source in North America and eastern Australia where commercial production has become an important part of their respective energy mix.
The company recently acquired Apollo Gas (ASX: AZO) as it has extensive gas resources capable of near term commercialisation.
Dart Energy is currently aiming for incremental resource and reserves certifications in 2011.
A 2P (Proven and Probable) reserve target has been set for the end of 2011 of 175 PJ (net to Dart Energy share) and a 3P reserve target by the end of 2011 of 1,500 PJ (net Dart Energy share).
The company also plans to achieve commercial production rates during 2011 and gas sales commencing in 2012 or earlier.
Dart hopes to achieve net production of 70 PJ per annum by 2015.
Eastern Star Gas (ASX:ESG)
Eastern Star is an exploration company exploring for both conventional and coal bed methane gas development opportunities.
Eastern Star has a market capitalisation of A$803.64 million and in the past six months its shares rose to a high of $0.95 in September before falling back to the current price of $0.81.
Its operations are focused primarily on New South Wales and Victoria. ESG's key asset is the Coonarah gas field supplying the 10 mega watt (MW) Wilga Park Power Station.
In FY08, ESG divested conventional gas exploration licences, except PEL 238, through the listing of Orion Petroleum (ASX: OIP), in which it holds a 23% interest.
The company plans to construct a 32km pipeline from the Narrabri Coal Seam Gas Project to the existing Wilga Park power station which is planned to be expanded from 12 to 40 MW.
Eastern Star Gas is considering constructing an LNG plant at Newcastle.
Planet Gas (ASX: PGS)
Planet Gas is an energy company with interests in conventional oil and gas resources, coal bed methane, and geothermal energy.
The company is well capitalised at A$33.09 million, having recently attracted the strategic investment backing of the senior Australian energy sector company, New Hope Corporation Limited.
PGS shares rose to a high of $0.125 in August before dropping back to $0.07 in January.
Planet Gas currently has numerous projects including low risk CBM exploration onshore Australia, in areas of existing production and infrastruacture.
In addition it has low risk conventional oil and gas exploration onshore Australia, also in areas of infrastrusture.
The company has active new venture programs in the USA and elsewhere, for conventional oil and gas.
The company had A$7.4 million cash at the end of the September quarter.
Planet Gas has refocused its near term Energy Objectives, working to monetise its CBM and conventional oil and gas portfolio, and is currently actively seeking new projects that will enhance shareholder value.
Metgasco (ASX: MEL)
Another company of note in the CBM area is Metgasco, who are exploring, appraising and developing the vast gas resources of the Clarence-Moreton basin in northern New South Wales.
Covering an area of approximately 1.5 million acres, the basin is prospective for both coal seam gas and conventional hydrocarbon resources.
Metgasco has a market capitalisation of A$105.34 million and saw its shares rose 58% to a high of $0.620 in November from a low of $0.365 in September. MEL is currently trading at $0.41.
The company has already established a large certified natural gas reserve position in New South Wales.
Gross reserves (in petajoules) in PEL 16 are 1P (Proven) 2.7 PJ, 2P (Proven and Probable) 397 PJ, and 3P (Proven, Probable and Possible) 2,239 PJ.
All reserves are from coal seam gas and so far these have been recognized over less than 5% of the company's acreage position.
Metgasco is at the very beginning of its conventional exploration program and the first well it drilled, Kingfisher E1, delivered a discovery.
Metgasco plans to build the 30 MW gas fired Richmond Valley power station to be fuelled by CBM over 15 years. Metgasco also plans to provide CS Energy's Swanbank Power Station in Ipswich with 18 PJ/ annum of CBM via the Lions way pipeline.
