PACE Completes Guizhou 3 Frac, Picks Up Immediate Gas Flow

PACIFIC ASIA CHINA ENERGY INC. reported that fracturing operations have been completed in the 3-well vertical pilot program (wells ZY04-1, -2 and -3) at its Guizhou CBM project.

Two coal seams (19 and 26/27) were fracced in each of the 3 wells. The operations were successful and in accord with the fracc design. Management is encouraged by the immediate flow of gas to surface following the fracc operations.

Installation of pumping equipment will be completed within a week and dewatering operations will begin shortly thereafter. Dewatering and monitoring of reservoir conditions is expected to continue for 2 to 3 months in order to determine the feasibility of economic gas production from these wells.

The Company plans to test other completion procedures in this area to determine the most effective method of production from this multi-seam CBM play. Cavitations of selected seams in two vertical wells and a dual-lateral well in a selected seam are planned for Q1 of 2008.

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