Australia-listed Sino Gas & Energy (SGE) is progressing coalbed methane (CBM) exploration drilling and seismic acquisition at the Linxing Production Sharing Contract (PSC) in the onshore Ordos Basin, with three rigs now on location, the company disclosed in an investor presentation Wednesday.
Two wells have been spudded in August, and a third is scheduled to spud in the third week of September. A fourth rig is currently being moved to the site, and it is expected to drill a fourth well in late September.
These wells are part of an eight-well program at the Linxing East block along with an additional deep exploration well to be drilled following the analysis of seismic results. Each well will be put through an extensive drilling and coring program, which will run for around 45 days. The wells will then be dewatered and progressed for a 12-week flow test.
"In addition to the work at Linxing East, testing and drilling of two deep wells in the Linxing West is also proposed," the company's managing director and CEO Robert Bearden said in a statement on Wednesday.
SGE is the foreign operator of two PSCs: Linxing and Sanjiaobei. The Linxing segment – which contains the Linxing East and Linxing West blocks – covers an area of 724 square miles (1,874 square kilometers) and is owned by SGE (64.75%), China United Coal Bed Methane (30%) and CBM Energy (5.25%). The Sanjiaobei block occupies an area of 434 square miles (1,124 square kilometers) and is owned by SGE (49%) and China National Petroleum Corporation (51%).
The three blocks contain projected gas reserves of 3.7 trillion cubic feet (tcf), with SGE's share estimated at 1.1 tcf.
After SGE collates drilling data, flow test results and seismic data from the three blocks, the company will move on to prepare a Chinese Reserve Report (CRR) for each of the blocks, Bearden told Rigzone through a telephone interview on Wednesday. "We aim to have all three CRRs submitted for approval by 2013," Bearden said.
Preparing a CRR is the first step in a two-step regulatory process to develop CBM assets into producing fields. After receiving CRR approval from China's National Energy Administration, foreign operators can then move on to prepare an Overall Development Plan (ODP) for their blocks. A foreign operator can only move into the production phase after receiving the green light on its ODP.
At present, Hong Kong-listed Sino Oil and Gas is the only listed foreign operator that has gained ODP approval.
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