Abstract: A method for increasing the production of methane from a subterranean coal formation penetrated by an injection well and a production well by producing methane from the coal formation via the production well; passing a portion of the methane to a synthesis gas generation zone wherein at least a portion of the methane is reacted with an oxygen-containing gas to produce a mixture of carbon monoxide and hydrogen; passing a major portion of the mixture to a hydrocarbon synthesis zone wherein the carbon monoxide and hydrogen are reacted to produce heavier hydrocarbons and a tail gas comprising nitrogen and carbon dioxide; separating a major portion of the tail gas from the hydrocarbons and recovering the hydrocarbons as a product stream; injecting at least a portion of the tail gas into the coal formation through the injection well. The methane may be obtained from a single well or a plurality of wells operated to produce the methane by a huff and puff process.