OREANDA-NEWS. US coal miner Drummond is preparing to develop coal-bed methane (CBM) for power generation in northern Colombia, as a years-long dispute with competitor Cerrejon over coal and methane gas resources at another site drags on.

"The environmental license is very advanced. We expect (regulator) ANLA's director Fernando Iregui will give us the license at any moment," Drummond Colombia chief executive Jose Miguel Linares said this week.

Drummond plans to invest $126mn to drill wells at its Caporo Norte license in Cesar province, where the company runs the El Descanso and Pribbenow thermal coal mines.

"We have a few wells from the exploration we've done… we would start drilling around 70 more wells and then we'd make a pipeline connection to our generation plant, since the idea in principle is to supply generation for our own operations," Linares said.

Drummond and Cerrejon, which is jointly owned by UK-Australian resources firm BHP Billiton, UK-South African mining firm Anglo American and Switzerland-based trading and mining company Glencore, nearly struck a deal in August 2014 to tap CBM in 3,400 hectares of Guajira province in northeastern Colombia where Cerrejon has already mined thermal coal.

But the talks broke down and the dispute between the two parties is still unresolved, the mines ministry tells Argus.

An agreement would end a five-year dispute between the country?s two largest coal miners over Drummond's Rio Rancher?a contract with state-controlled oil company Ecopetrol.

CBM has the potential to replenish Colombia?s dwindling gas reserves. Mining and energy planning unit Upme projects gas demand to eclipse domestic supply in 2017. A group of Colombian power generators plans to start importing LNG next year.

Colombia has about 5.7 trillion ft3 of gas reserves, equivalent to about 13.7 years of production at the current level of just over 1bn ft3/d (28mn m3/d).