Assessment of the Potential for Economic Development and Utilization of Coalbed Methane in Poland

United States Air and EPA/400/1-91/032 Environmental Protection Radiation August 1991 Agency (ANR-445) Assessment of the Potential for Economic Development and Utilization of Coalbed Methane in Poland @ Printed on Recycled Paper ASSESSMENT OF THE POTENTIAL FOR ECONOMIC DEVELOPMENT AND UTILIZATION OF COALBED METHANE IN POLAND Prepared By: Raymond C. Pilcher - Raven Ridge Resources, lncorporated Carol J. Bibler - Raven Ridge Resources, lncorporated Roger Glickert - Energy Systems Associates Lawrence Machesky - Raven Ridge Resources, lncorporated James M. Williams - Planning Information Corporation Dina W. Kruger - U.S. Environmental Protection Agency Samuel Schweitzer - U.S. Agency for International Development August 199 1 SUMMARY INTRODUCTION This report presents an assessment of Poland's coalbed methane resources commissioned by the U.S. Agency for International Development's Office of Energy (AID) and the U.S. Environmental Protection Agency (EPA). The study evaluates the potential for coalbed methane development to help Poland achieve its environmental and energy needs. The study assesses the coalbed methane resources of both virgin (yet minable) coal seams and ongoing mining operations, but focuses on coalbed methane recovery from the latter. Methane recovery in coal mining areas is emphasized because failure to utilize methane liberated as a result of mine operations represents the loss of a valuable energy resource, and because methane is a greenhouse gas affecting the global climate. KEY FINDINGS Economic problems will worsen as domestic energy production continues to decline and the demand for imported energy continues to increase. A new source of domestic energy would reduce economic burdens. -- Coal dominates Poland's fuel mix, but hard coal production is declining as shallower reserves are depleted. Annual coal produciion has declined by more than 25 percent since 1988. In addition to reducing available domestic energy, this decline means less hard coal is available for export, and hard coal exports account for about eight percent of Poland's hard currency for use in foreign exchange. -- The lack of sufficient domestic oil resources forces Poland to import about 99 percent of the oil it consumes. Rising imported oil costs create serious strains for the Polish economy and balance of trade. -- Given the situation confronting coal and oil supplies, it is likely that natural gas will significantly contribute to Poland's future energy mix. Conventional domestic gas reserves are insufficient to meet substantial increases in demand. Poland already imports about 60 percent of its natural gas from the USSR; not only is price of this gas rising sharply, but the source is unreliable. -- The Polish government plans to close all but four coke oven plants as well as its uneconomic coal mines, by the year 2000. While this move is necessary for environmental and economic reasons, it will sharply reduce available domestic energy. In particular, the closure of coke oven plants will reduce the production of coke oven gas, about half of which (3.5 billion cubic meters in 1989) is used by households and industries. Coalbed methane produced by mines could readily replace coke oven gas, alleviating the shortage. -- Considering the status of the energy economy as described above, Poland would benefit from development of a "new" domestic natural gas resource: coalbed methane. 0. Coalbed methane is an abundant domestic natural gas resource that is currently underdeveloped in Poland. In particular, coal mining operations waste a tremendous amount of this methane. -- The coalbed methane reserves contained in active mine concessions in Poland are estimated at 380 billion cubic meters. This estimate is conservative in that it does not include methane in coal seams deeper than 1000 meters; yet it is still more than twice the size of Poland's conventional natural gas reserves. The total coalbed methane resource associated with all coal mine concessions is estimated to exceed 1.3 trillion cubic meters. This is also a conservative figure, in that it does not include methane in coal bearing intervals deeper than 1500 meters, nor methane in the Lublin Coal Basin. -- Large amounts of coalbed methane are liberated by Polish coal mines each year, which represents a serious waste of energy. It is estimated that 4.8 billion cubic meters of coalbed methane are liberated annually as a result of mining operations in Poland, and that only 200 million cubic meters (four percent) of this gas are used. There is great potential for expanded methane recovery and use at coal mines, and many different options are available for using the coalbed methane recovered from mining operations. -- An integrated approach to methane recovery includes drainage of methane prior to, during, and after mining. If such an approach were used within Poland's mining concessions, up to 80 to 90 percent of methane liberated by mining activities could be recovered and utilized. -- Coalbed methane could be used to generate steam and electricity, displacing the use of hard coal and lignite. Not only would this reduce the waste of coalbed methane, it would reduce air pollution in communities that surround the electrical generation facilities and mines, and improve the economic viability of hard coal mining operations. - Coalbed methane can be transported by pipelines directly to end users. One attractive possibility is to use methane from Poland's coal mines to replace coke oven gas currently used by households and industries. -- There may also be opportunities for using the low-concentration methane contained in mine ventilation air. At some mines, it may be possible to economically transport this airlmethane mixture to nearby power plants for use as combustion air. Aggressive development of coalbed methane could make important contributions to Poland's economy and environment, as well as benefiting the global environment. -- It is likely that Poland will continue to reduce coal and coke oven gas production in order to mitigate its life-threatening environmental problems. While this will provide welcome reductions in pollutants, it will require a much larger expenditure for imported energy. Aggressive utilization of coalbed methane will permit Poland to achieve its environmental goals with far lower expenditures for imported natural gas. -- Preliminary economic estimates suggest that if coalbed methane is aggressively developed, by the year 2000 Poland could spend 22 percent less on imported natural gas than it would if coalbed methane is not developed. Not only would Poland save money, but a domestic energy source is likely to be more reliable. If coalbed methane is aggressively developed, methane emissions from coal mining in Poland could decrease dramatically, perhaps by as much as 80 percent. In addition, recovery of this methane would improve mine safety, efficiency, productivity, and profitability. When advanced degasification techniques are used, less capital is required for installation and maintenance of mine ventilation systems. Methane concentrations in the mines are also reduced, which lowers the risk of injury and death to miners resulting from methane explosions. Since methane is a greenhouse gas, estimated to be 20 times more potent that CO, on a weight basis, this reduction in emissions would make a significant contribution to mitigation of the greenhouse effect. An aggressive program of coalbed methane development should be pursued in Poland in order to help the nation achieve its economic and environmental objectives. -- At mining operations, an integrated approach to methane recovery should be evaluated and, where possible, a staged approach to methane recovery should be implemented. -- The many options for using methane recovered from coal mining should be carefully evaluated at Poland's coal mines to ensure that efficient uses of recovered gas are developed. The rapid development of coalbed methane will require a concerted effort from the Polish government. International development agencies, foreign governments, and private industry should work together to help the government of Poland in this endeavor. -- The Polish government should give priority to coalbed methane development in its energy industry restructuring program, perhaps incorporating tax incentives and similar programs. -- To address information needs, a coalbed methane clearinghouse should be established, which will disseminate information within Poland about coalbed methane resources, development and use. -- Training should be provided to representatives of government agencies and mines to raise awareness of coalbed methane and the techniques for developing it. This training should include technical, economic, and regulatory components. -- To prepare Poland for large-scale investment in its coalbed methane resource and to assist in the effective reorganization of its mining industry, a mine screening study should be undertaken. This study will evaluate site-specific conditions at several mines in a preliminary manner and identify the best candidates for methane recovery and use at these sites. -- To address water disposal issues that may arise in the large-scale development of Poland's coalbed methane resource, an assessment of disposal options should be undertaken, including an investigation of underground injection. This study would also have important implications for the disposal of water produced by coal mining. In order to fully assess the economic and social impacts that could result from increased

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