Abstract During the past ten years, unconventional hydrocarbon resources have been receiving more attention, as a source of energy. Among these unconventional resources one is the coal bed methane (CBM). To find out the feasibility of the unconventional reservoir development, reserves is estimated and the economic analysis is carried out. The methods for the estimation of reserves requires the initial gas in place calculations, however, the methods describing the IGIP estimation using conventional method cannot be applied to CBM reservoirs without modifications. This paper presents critical literature review of CBM material balance that identifies and examines challenges encountered in CBM recovery. The paper addresses the methods for the estimation of IGIP for Coal Bed Methane and included the review of the available techniques using volumetric, simulation and performance method i.e. decline curve and material balance. Also, the possible causes of error in calculation of IGIP and the limitations of each method have been identified. Additionally, the comparison between the material balance method proposed by King et al., Jenson and Smith et al., Seidel et al., Ahmed et al., Firanda et al. is conducted using available data set. The results obtained shows that Firanda et al. is more realistic as compared to other discussed methods, as it considers matrix and cleat shrinkage, moisture expansion, gas expansion, connate water expansion, water expansion, and water influx.