Project Profile
Location: Tkibuli-Shaori Coal Field, Imereti Region, west central Georgia
Reserves: 400 bcf of CBM gas
Tkibuli Project is an CBM gas project taken place in the Tkibuli-Shaori Coal Field, in west central Georgia, Imereti Region. The field has been estimated by ARI to contain Contingent Resources (mean) of approximately 400 billion cubic feet (bcf) of CBM gas. Sand horizons have also been identified around the coal beds, which could add additional, conventional hydrocarbon resources to those estimated for CBM at Tkibuli alone. Over 400 exploration and non-hydrocarbon wells have been drilled in the Tkibuli area, many encountering hydrocarbons and one producing gas for over 35 years.
Red Emperor Resources NL along with its joint venture partners, Strait Oil and Gas UK Limited (Strait) and Range Resources Limited (Range) together the Consortium have executed a heads of agreement with the Georgian Industrial Group (GIG) with respect to the joint development of the Coal Bed Methane project (CBM) and conventional gas potential around the Tkibuli-Shaori Coal Field (Tkibuli Project) in the Republic of Georgia. GIG and the Consortium will jointly establish a Development Company on a 50:50 basis. The Development Company will be commencing feasibility and technical studies, followed by an initial three or four well pilot project. The appraisal / pilot production wells will be drilled first to clarify flow rates and other key parameters including optimum well construction / completion strategy, well spacing and water treatment and disposal requirements prior to full scale development. Based on a study by Advanced Resources International (ARI) full development would involve 6 CBM wells per annum that are forecast to produce between 0.3-0.5 mmcf/d per well. It is anticipated that over the first 3 years, production will build to rates that will fund further expansion of the CBM project.
The initial pilot project will focus on appraising area already known to be venting methane, thus ensuring a higher chance of success. The work programme is anticipated to commence in the second half of 2013 and will be predominantly debt financed, resulting in limited capital commitments for Red Emperor moving forward. New wells will target horizons at depths between 500 and 2,000 metres and can be drilled within approximately 45 days. The fast-track program is designed for gas production and sales to begin within 18 months given the existing infrastructure and logistics. GIG have agreed a take or pay arrangement for all gas produced by the Development Company at a 5% discount to a regional indexed price less transportation, thus removing the monetisation risk so often faced with prospective CBM projects in the region. Over the last few years regional prices have averaged between US$8 - US$10/mcf. It is the intention of the Consortium to ensure that the first well of the pilot program counts as the commitment well with respect to retaining Block VIb. Red Emperor will be free carried for the full costs of this first well.
Operators:
Georgian Industrial Group (GIG): 50% interest
Joint venture: 50% interest
Red Emperor Resources NL
Strait Oil and Gas UK Limited (Strait)
Range Resources Limited (Range)
Contractors:
Advanced Resources International (ARI): Contingent resource estimate study