The development plan for the Qinshui Basin Chengzhuang Cooperative CBM Block (GCZ) of China-focused coal bed methane (CBM) gas group Green Dragon Gas has been approved by the Consultation Centre of China National Petroleum Corporation (CNPC).
The main market-listed firm said, “On April 8, 2017, in accordance with China’s 13th Five-Year Plan, Chinese government authorities delivered a policy to facilitate expediting the State approval processes.”
The development plan includes the drilling of an additional 147 production wells in 2017 and 2018.
Gross annual production at GCZ is estimated to be 3.01 billion cubic feet (Bcf) of gas in 2017, with production estimated to increase to 3.23 Bcf in 2018. 2.64 Bcf of this is expected from existing wells and 0.59 Bcf from new wells.
On successful completion of the development plan, the estimated current probable reserves at GCZ of 15.7 Bcf are expected to be migrated to 1P reserves, bringing the group’s total 1P reserves to 29 Bcf.
The development cost for GCZ is budgeted to be around US$53.80 million over 2017 and 2018. CNPC will invest US$28.51 million of that in accordance with its 53% participating interest and Green Dragon US$25.28 million based on its 47% of participating interest in the Block.
Green Dragon’s chairman and founder Randeep S Grewal said: “This is a significant step forward for GDG and a further realisation of our strategy of progressing our resource base through to long term production. The GCZ ODP, while only 0.44% of our total acreage, fairly represents the profit potential of Green Dragon’s asset portfolio.
“We have invested $45.5 million between 2009 and 2016, during which 114 wells were drilled and on commencement of production, the costs were recovered leading to net cash flow returned as dividends to the parent from October 2015.”
Randeep Grewal also said he welcomed the continued and consistent support of the Chinese central government for CBM in China and its plans to aid the coal bed methane industry.
Green Dragon Gas is the largest independent producer and distributor of CBM in China. Its core asset value proposition extends over six Production Sharing Contracts (PSC’s) over seven blocks, two of which are in production.