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Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries.

Also called coalbed gas, the term refers to methane adsorbed into the solid matrix of the coal. It is called 'sweet gas' because of its lack of hydrogen sulfide. The presence of this gas is well known from its occurrence in underground coal mining, where it presents a serious safety risk. Coalbed methane, often referred to as CBM, is distinct from a typical sandstone or other conventional gas reservoir, as the methane is stored within the coal by a process called adsorption. The methane is in a near-liquid state, lining the inside of pores within the coal (called the matrix). The open fractures in the coal (called the cleats) can also contain free gas or can be saturated with water.

Unlike much natural gas from conventional reservoirs, coalbed methane contains very little heavier hydrocarbons such as propane or butane, and no natural gas condensate. It often contains up to a few percent carbon dioxide.

To extract the gas, a steel-encased hole is drilled into the coal seam (100 - 1500 meters below ground). As the pressure within the coal seam declines, due to the hole to the surface or the pumping of small amounts of water from the coalbed, both gas and 'produced water' escape to the surface through tubes. Then the gas is sent to a compressor station and into natural gas pipelines. The 'produced water' is either reinjected into isolated formations, released into streams, or used for irrigation. The water typically contains dissolved solids such as sodium bicarbonate and chloride.

Coalbed methane wells often produce at lower gas rates than conventional reservoirs, typically peaking at near 300 thousand cubic feet per day (about 0.100 m³/s), and can have large initial costs. The production profiles of CBM wells are typically characterized by a "negative decline" in which the gas production rate initially increases as the gas rate as water is pumped away and gas begins to desorb and flow. A dry CBM well does not look very different from a standard well, except that the gas rates are lower and decline at a much slower rate.

The methane desorption process follows a curve (of gas content vs. reservoir pressure) called a Langmuir isotherm. The isotherm can be analytically described by a maximum gas content (at infinite pressure), and the pressure at which half that gas exists within the coal. These parameters (called the Langmuir volume and Langmuir pressure, respectively) are properties of the coal, and vary widely. A coal in Alabama and a coal in Colorado may have radically different Langmuir parameters, despite otherwise similar coal properties.

As production occurs from a coal reservoir, the changes in pressure are believed to cause changes in the porosity and permeability of the coal. This is commonly known as matrix shrinkage/swelling. As the gas is desorbed, the pressure exerted by the gas inside the pores decreases, causing them to shrink in size and restricting gas flow through the coal. As the pores shrink, the overall matrix shrinks as well, which may eventually increase the space the gas can travel through (the cleats), increasing gas flow.

The potential of a particular coalbed as a CBM source depends on the following criteria. Cleat density/intensity: cleats are joints confined within coal sheets. They impart permeability to the coal seam. A high cleat density is required for profitable exploitation of CBM. Also important is the maceral composition: maceral is a microscopic, homogeneous, petrographic entity of a corresponding sedimentary rock. A high vitrinite composition is ideal for CBM extraction, while inertinite hampers the same.

The rank of coal has also been linked to CBM content: a vitrinite reflectance of 0.8-1.5% has been found to imply higher productivity of the coalbed. Last but not the least, the gas composition must be considered: the methane composition of the extracted gas should not be less than 92%.

Estimated methane reserves vary, however a 1997 estimate from the U.S. Geological Survey predicts more than 700 trillion cubic feet (20 Tm³) of methane within the US. At a natural gas price of US$6.05 per million Btu (US$5.73/GJ), that volume is worth US$4.37 trillion. At least 100 trillion cubic feet (2.8 Tm³) of it is economically viable to produce. British Columbia is estimated to have approximately 90 trillion cubic feet of coalbed gas. High natural gas prices are making CBM economically viable where it previously may not have been.

There are a few pieces of software which can simulate CBM reservoirs for the purpose of forecasting or determining reserves:

• U.S. Geological Survey page on CBM
• U.S. Environmental Protection Agency page on CBM
• EXODUS Reservoir Simulator
• FAST CBM Reservoir Toolkit
• ECLIPSE CBM
• 3M Coalbed Methane Reservoir Model (public domain software)
• British Columibia Ministry of Energy, Mines and Petroleum Resources guide to coalbed gas