The Revenge of the Powder River Basin: Current Economics of Coal Gas Production

O'Connor, Leslie S., John P. Seidle
Sproule Associates Inc, Denver, CO

Initial estimates of Powder River Basin coal well productivity and economics were predicated upon performance of a small number of wells located on the eastern margin of the basin coupled with existing pipeline capacity and gas prices. As the play has matured, coals in other parts of the basin are being tested and current production can be geographically divided into four large areas: the original area along the eastern outcrop, multiple coals in the northeast part of the basin, coals on the western limb of the basin, and coals in the deep basin. In addition, pipeline capacity has increased, basin infrastructure has grown, and well costs and expenses better defined. This study contrasts typical gas and water rates and recoveries for selected wells in the four areas and presents economics for all four areas using current capital costs and expenses combined with recent gas prices.