Coalbed methane (CBM) is going to be an important facet of the nation’s energy mix. It is expected to contribute in importance energy back up for the future. CBM is natural gas, a clean-burning energy source that is reservoired in a coal seam. CBM is formed during the coal maturation process and may in a free or adsorbed state in coal seams in adjacent formations. CBM is dominantly methane but lesser concentrations of carbon dioxide and nitrogen, compare to conventional natural gas. However, in most cases, CBM is of sufficient quality for sale directly into natural gas transmission lines with a limited amount of moisture removal.CBM as natural gas has numerous benefits to include direct selling, well suited as city gas, electricity generation, boiler fuel, transportation fuel, and for many types of chemical industries feed. Beside CBM replaces coal to be greatly reduces the production of acid rain and other forms of air pollution, the development of CBM has benefitial for coal miners. It can contribute to improved mining safety as well as it can help reduce construction costs.CBM is probably one of the promising alternative fuel energy resources in Indonesia that its presence is actual and comparable with the existing coal resources in any potential basin. Unlike some well in developed countries where commercialization of methane production from coal seam has been developed, coals direct mined in Indonesia seem to be more attractive and preferable technique to supply the consumer demand of energy. This is because coal mines serve direct products, less complicated technology, low exploration risks, easy recovery, relatively low cost but quick yields and already have wide market. Consequently, people have overlooked the existence of consisting huge potential methane gas in coals.However, petroleum exploration data throughout Indonesia suggest that increasing coal rank occurs rapidly with depth in many basins and that gas kicks are almost common associated with some coal seams below 200 m depth. In addition, world CBM exploration now has shifted towards lower rank settings (i.e, vitrinite reflectance between 0.3% and 0.6% Ro). In Indonesia, thick coals generally are found at greater depth, higher in rank and therefore are expected to be more productive (Saghafi and Hadiyanto, 2000).LEMIGAS is currently conducting a drilling program to study the feasibility of CBM production in South Sumatra. The domain of the work is in the Muaraenim Formation (Upper – Middle Palembang). The coal sequences were deposited during Late Miocene. We believe that a big effort is extremely essential to establish the reserve and economic potential of CBM in South Sumatra to later extent to Indonesia.