Admiral explores coal bed methane source.

Admiral Bay Resources Inc. (TSX. V: ADB) is hoping a deposit of coal bed methane just north of Kapuskasing is commercially viable enough to make a long-term investment on.

"We're at a very early stage of our exploration," says Admiral Bay Resources Inc. president Mark Brennan of the 255,000 acres of staked property north of Kapuskasing in the Moose River basin.

He says the land, in addition to being one of the largest swamp areas in North America, is possibly a source of anywhere between 210 billion to as much as a trillion cubic feet of coal bed methane (CBM) gas.

"We've done five holes to date and we're going to drill another six and then we're going to do a five-well pilot program starting sometime in June," Brennan says. "The purpose of the pilot project is to test the permeability and porosity of the ground and see if we can get enough gas out of it."

The area has been known to be a coal bed for about a century, says Brennan. The idea of exploiting the area as a potentially rich source of coal bed methane, one of the "purer" forms of natural gas, was brought forward by James Bay Energy Inc.

Because of its proximity to the Trans Canada gas pipeline about 80 kilometres away, Brennan says the project would not be a significantly expensive project to develop.

"When you're doing coal bed methane, it is a very mining-oriented process. What you do is go in and drill a hole and you pull out a core, metre by metre, and put each in canisters. They immediately start throwing out gas. How much gas comes out will determine the standard cubic ton per foot. We anticipate that we should have results out shortly."

He says the company believes the Moose River Basin is very similar to the Fort Union formation of Wyoming's Powder River basin.

"The Powder River Basin has been a very prolific producing basin for the past 10 to 15 years in the U.S.," Brennan says. "We're hopeful we have the same type of play."

The company has been approached "very superficially" to exploit the coal resource and there are some diamond companies who are looking at it as a possible source of diamonds since pressure plus carbon sometimes equals the formation of diamonds.

In the 1980s, the Ontario government even considered the coals for possible use as a source of energy for coal-fired power plants. Its heat output in British Thermal Units (BTUs) however, was considered too low to be effective at the time.

Brennan says the company's primary focus is on the methane, especially since North American resources in methane are already running low.

"In Canada, it's a very new commodity," he says. "As an analogy, I equate our position with methane right now as Canada was in the early '90s with diamonds. Back then, we didn't produce any and now we're the third largest producer in the world ..."

By ANDREW WAREING

Northern Ontario Business