Coalbed methane reservoir (CBM) is charactered by dual pores, two phases and multiple transport mechanisms, which combines diffusion, desorption and permeation. Austar Gas specialised in characterisation of Coalbed Methane reservoir. The migration of gas from coal surface to well bore passes above three stages. The flow rate measured in well test is governed by above three mechanisms. As results, the permeability, porosity interpreted from pressure transient test are related to desorption –diffusion speed, which is usually expressed by sorption time. Sorption time represents the time that gas migrates to cleat from matrix centre. Sorption time is dependent on cleat spacing, gas concentration. In turn, the gas concentration was controlled by adsorption/desorption nature and formation pressure if the temperature is constant. In order to interpret accurately permeability and porosity from well test data, the sorption time required by reservoir model should be determined appropriately. The absence of sorption time data commonly bring uncertainty of permeability and porosity interpreted due to failure of coal samplingSeveral methodologies are available to interpret pressure transient test for obtaining permeability and porosity from coalbed methane well. The most common approaches include conventional analysis, pseudopressure analysis and reservoir simulation. V.A. Jochen’s study (1994) showed that the conventional method and pseudopressure analysis had their own limitations. Conventional well method is based on single-phase flow rate. Obviously, it can not reflect the two-phase and desorption-diffusion nature of coalbed methane reservoir. The psedopressure solution is based on an equilibrium state that does not exactly exist in coalbed methane reservoir. A CBM simulator, SIMED II is employed by this study to interpreted pressure transient test data by using simulation means. It accounts for two phase flow, gas desorption, methane diffusion characters, the effect of sorption time on reservoir behaviour and well operation perdures simultaneously.