A detailed evaluation of the hydraulic parameters and formation fluids of a key test-well completed in the uppermost Ardley coal was undertaken in the Pembina-Warburg exploration area, Alberta Basin, Alberta, Canada. The testing method isolated the target coal zone from the overlying Paskapoo Formation with an intermediate casing set in the coal. Measurements showed a build-up of fluid (water) pressure within the coal to approximately 1,470 kPa. Detailed hydro-geological testing showed that the permeability of the coal is clearly less than 5 mD and likely on the order of I mD. Formation waters sampled during the drawdown and build-up phases were Na-HCO3 type with salinities of approximately 1,920 mg/L TDS (calculated). Sodium and chloride concentrations were approximately 835 and 250 mg/L, respectively. Detailed analyses of the formation waters showed that dissolved and total trace metal concentrations fall within Canadian drinking water quality standards with the exception of iron and manganese. Organic compounds including monocyclic aromatics (Benzene, Toluene, Ethyl-benzene, Xylene, BTEX) were not detected, with the exception of trace toluene concentrations. Anomalously high bicarbonate concentrations of up to 1650 mg/L (delta C-13(DIC) +22.50 parts per thousand) and dissolved methane concentrations of up to 36 mg/L (delta C-13(CH4) -48.32 parts per thousand) point to the presence of secondary biogenic gas. Formation waters are non-tritiated; delta O-18 and delta H-2 values plot along the local groundwater line for Edmonton, Alberta indicating a meteoric origin. Data from the test-well suggest that depressurization (i.e., diversion of fluids) of the coal zone is necessary for gas production. If depressurization is contained to within the coalbeds, relatively small quantities of produced fluids would be anticipated. Although most of the groundwater for consumption within the immediate area of the test well is obtained from shallower parts of the flow systems in the uppermost parts of the Paskapoo Formation, under the current regulatory framework a Preliminary Groundwater Assessment as defined by the Alberta Environment and the EUB (2004) would be necessary prior to diversion.