Project Profile
Value: Undisclosed
Location: Shouyang Block in Shanxi Province, China
Reserves: Unknown
Area: unknown
The Qinnan Block is located a few miles south of the Shouyang Block in Shanxi Province and it is owned by Far East Energy. Under the original Production Sharing Contract, China United Coal Bed Methane (CUCBM) was the partner in exploring and developing the Qinnan field. CUCBM was a joint venture between the China National Coal Group Corporation and China National Petroleum Corporate (CNPC). However, CNPC recently withdrew from this joint venture and has replaced CUCBM as the Chinese partner in the Qinnan Production Sharing Contract.
As in the Shouyang field, the Qinnan PSC called for a three phase exploration period. Phase I called for Far East Energy to perform a hydraulic fracture procedure on at least one previously drilled exploration well, which we performed in September 2004. The company completed the QN-002 well and testing was performed on a coal seam at a depth of 550 metres (1,880 feet). The objective was to gain information about the permeability of that particular coal seam. The company fulfilled the obligations under Phase II by drilling and completing two horizontal wells in the Shouyang Block prior to March 31, 2006.
In 2006, they acquired and processed 26 kilometres of 2D seismic data in the Qinnan Block and obtained data from a vertical well drilled in December of that year. The company utilised this well data and the 2D seismic data to plan a program of horizontal wells. They completed the first horizontal well in the block in 2008, with a well drilled into the #3 coal seam. This coal seam is the object of development by other companies in the area.
However, the exploration period granted in the Qinnan PSC expired on June 30, 2009 and the company cannot continue the exploration activities in the Qinnan Block without an extension of the PSC. In January 2011, Far East received formal notice from CNPC that is has purportedly received all Chinese approvals with respect to the transfer and they have requested that the company execute a modified agreement that confirms CNPC as the Chinese partner for the Qinnan PSC. Currently the modified agreement is under review and discussion and Far East have begun working with CNPC on a variety of matters concerning the Qinnan PSC.
Operators:
Far East Energy
CNPC