Methane is produced from fractured coalbed reservoirs at Cedar Hill Field in the San Juan Basin. Fracturing and local stress are critical to production because of the absence of matrix permeability in the coals. Knowledge of the direction of open fractures, the degree of fracturing, reservoir pressure, and compartmentalization is required to understand the flow of fluids through the reservoir. A multicomponent 3-D seismic survey was acquired to aid in coalbed methane reservoir characterization. Coalbed reservoir heterogeneities, including isolated pressure cells, zones of increased fracture density, and variable fracture directions, have been interpreted through the analysis of the multicomponent data and integration with petrophysical and reservoir engineering studies. Strike‐slip faults, which compartmentalize the reservoir, have been identified by structural interpretation of the 3-D P‐wave seismic data. These faults form boundaries for pressure cells that have been identified by P‐wave reflection amplitude anomalies. The analysis of polarizations, traveltimes, and reflection amplitudes from the shear‐wave seismic data has allowed the identification of zones of variable fracture direction and fracture density. There is good agreement between stresses inferred from the structural interpretation and those indicated by the shear‐wave polarizations. Reflection amplitudes have been calibrated to seismic velocities and reservoir pressures through the use of petrophysical data taken from core samples. New methods have been developed for the statistical analysis of prestack shear‐wave polarizations, poststack polarizations, and the accurate determination of traveltime anisotropy. The prestack polarization analysis method allows for rapid and efficient determination of a dominant polarization direction. Shear‐wave anisotropy has been quantified over the reservoir zone using both traveltime and thin‐bed reflection response with excellent agreement between the two methods. Crack densities computed from the anisotropy show two regions of high crack density, one coinciding with a sealed overpressured cell and the other in the region of the Hamilton ♯3 well. This indicates the potential for monitoring production of coalbed methane reservoirs using multicomponent seismology.