Sino G&E Reports Positive Gas Flow Rate at Linxing PSC in Ordos Basin

Sino Gas & Energy Holdings Limited (Sino Gas, the Company) revealed Tuesday that a gas flow rate of approximately five million standard cubic feet per day (MMscf/d) has been achieved on the first horizontal well of the Linxing Production Sharing Contract (PSC) in Ordos Basin, Shanxi Province, China.

The first horizontal well, drilled in late 2013, has been fracced in a 16.4 foot (5 meter) middle level zone in the south-western discovered area of Linxing (West). Following a nine stage fracture stimulation treatment, flow testing was conducted over 80 hours in two stages, achieving a gas flow rate of 4.93 MMscf/d at a relatively stable flowing tubing head pressure of 2,008 psi (over 8 MMscf/d calculated at standard field pressure of 200 psi). Pressure build-up testing was conducted in between the two testing phases for eight days, with initial results indicating an estimated formation pressure of 3,116 psi.

The testing of the first horizontal well result follows optimization of the fracture stimulation treatment on three vertical wells on Linxing (West), and it is planned to be tied into pilot pipeline production program scheduled for later in the year. This is a single zone test from a middle level zone, however electric wireline log results showed another additional two major prospective pay zones in the upper formations of the well. The second horizontal well on the Linxing (West) acreage was spudded in late June and is now over halfway through drilling.

Commenting on the result, Sino Gas Chairman, Gavin Harper, said that after careful analysis and review to enhance testing procedures, we are pleased with the tremendous result from the first horizontal well. To date, RISC’s economic evaluation has been modelled based on a development case employing 100 percent vertical wells. The testing results, which came in at the high end of our expectations, provides a confirmation that the use of horizontal well technology can potentially have a positive effect on our project economics, as we further optimize our field development plans.

The level of activity in the field continues to be very high, with eight rigs and four testing teams currently deployed, and construction proceeding on pilot program pipeline and facilities. The company will be provide a comprehensive update of activities within the quarter in its 2Q 2014 activity report.


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