Coal seams are compact gas reservoirs and can contain large volumes of methane (CH4) and carbon dioxide (CO2) which are the main constituents of coal seam gas (CSG). CSG is present in various volumes and concentrations across the mining regions in the coalfields of the Sydney and Bowen basins. The variations in actual gas volumes and relative concentration of these gases in coal could be due to different gas generation/accumulation rates and different adsorption capacity of the coals, but also because of the difference in the sealing capacity of the non-coal sediments enclosing the coal seams. It is postulated that the sealing capacity of the main roof and floor rocks at a coal seam could have a major effect on the volume of gas in place (gas content). This paper reports some results of an ongoing investigation on the gas flow parameters which affect the sealing capacity and retention of gas in coal reservoirs. The results discussed here concern, in particular, the matrix permeability (or micro permeability) and the diffusivity of the non-coal horizons in the roof and floor of the coal seams. These properties could be limiting factors on the rate of gas escape from a coal formation to the surrounding strata.