Project Profile
Location: Qinshui Basin, 233 miles (375 Km) southwest of Beijing, China
Reserves: 6.9 Tcf (197 Bcm) and high estimate is 8.4 Tcf (240 Bcm)
Area: 1,962.8 square kilometres
The Shouyang block is located in the Qinshui Basin approximately 233 miles (375 Km) southwest of Beijing. The total area encompasses 485,018 acres (1,962.8 square kilometres) and is the current focus of our operations.
The permeability found in the block initial wells is very high. This high permeability allows gas to move with greater ease through the coal, and from greater distances which makes it possible to gain maximum recoverability with fewer wells drilled. However, this same high permeability also means water can move to the well with greater ease and from greater distances meaning it will take longer to dewater each well. The key to capitalising on the advantages offered by this high permeability and high gas content and reaching maximum production at the earliest possible date is to drill a pattern of wells in a focus area that minimizes the dewatering time and allows wells to produce marketable gas sooner. The Shouyang Block is characterised by three coal seams, the #15, the #9 and the #3 coals seams, with current production predominately from the #15 and #9.
As of December 31, 2010, Far East Energy has drilled and fraced 53 CBM wells. Of these 53 wells, 40 are program wells drilled in the 1H Pilot Area and 13 are pilot development test wells to expand the field to the west. There were 5 to 8 rigs to continue a drilling program of 60 pilot production and pilot development test wells from September 2010 to mid year 2011. According to studies conducted by Advanced Resources International, Inc. (ARI), the #15 coal seam is especially productive with permeability between 80 and 120 millidarcies and an estimated gas content of 500 scf (standard cubic feet) per ton of coal. The study estimates peak daily production per vertical well on 80 acre spacing from this seam of 300-500 Mcfpd (thousand cubic feet per day). As an alternative the company could drill horizontal wells on a 400 acre spacing and reach an estimated 2.3-5.0 MMcfpd (million cubic feet per day).
FUTURE DEVELOPMENT
Far East Energy signed a gas pipeline sales contract in June 2010 with the Shanxi Provincial Guoxin Energy Development Group (SPG). This pipeline was built in December 2010 and first gas sales occurred in January 2011. Far East gas will be flowing into a newly completed pipeline that has total capacity of approximately 40 MMcfpd (million cubic feet per day). This is a 20 year contract and it is on a “take or pay” basis, meaning the pipeline must take all gas produced up to 10.6 MMcfpd (million cubic feet per day) or pay for all available volumes not taken. This second pipeline was completed in the first half of 2012. Far East is at present waiting for MofCom to grant it an extension on its exploration rights in the Shouyang field.
Operators:
Far East Energy: Operator with 100% interest