The San Juan Basin natural gas field, located in northwestern New Mexico and southwestern Colorado in the USA, is a case-type coalbed methane system. Groundwater is thought to play a key role in both biogenic methane generation and the CO2 sequestration potential of coalbed systems. We show here how noble gases can be used to construct a physical model that describes the interaction between the groundwater system and the produced gas. We collected 28 gas samples from producing wells in the artesian overpressured high production region of the basin together with 8 gas samples from the underpressured low production zone as a control. Stable isotope and major species determination clearly characterize the gas in the high production region as dominantly biogenic in origin, and the underpressured low producing region as having a significant admix of thermogenic coal gas. 3He/4He ratios increase from 0.0836Ra at the basin margin to 0.318Ra towards the center, indicating a clear but small mantle He signature in all gases. Coherent fractionation of water-derived 20Ne/36Ar and crustal 4He/40Ar* are explained by a simple Rayleigh fractionation model of open system groundwater degassing. Low 20Ne concentrations compared to the model predicted values are accounted for by dilution of the groundwater-associated gas by desorbed coalbed methane. This Rayleigh fractionation and dilution model together with the gas production history allows us to quantify the amount of water involved in gas production at each well. The quantified water volumes in both underpressured and overpressured zones range from 1.7 × 103 m3 to 4.2 × 105 m3, with no clear distinction between over- and underpressured production zones. These results conclusively show that the volume of groundwater seen by coal does not play a role in determining the volume of methane produced by secondary biodegradation of these coalbeds. There is no requirement of continuous groundwater flow for renewing the microbes or nutrient components. We furthermore observe strong mass related isotopic fractionation of 20Ne/22Ne and 38Ar/36Ar isotopic ratios. This can be explained by a noble gas concentration gradient in the groundwater during gas production, which causes diffusive partial re-equilibration of the noble gas isotopes. It is important for the study of other systems in which extensive groundwater degassing may have occurred to recognize that severe isotopic fractionation of air-derived noble gases can occur when such concentration gradients are established during gas production. Excess air-derived Xe and Kr in our samples are shown to be related to the diluting coalbed methane and can only be accounted for if Xe and Kr are preferentially and volumetrically trapped within the coal matrix and released during biodegradation to form CH4.