Green Dragon Gas Ltd Guizhou Block Update (7526K)
September 26 2016 - 2:00AM
UK Regulatory
TIDMGDG
RNS Number : 7526K
Green Dragon Gas Ltd
26 September 2016
26 September 2016
GREEN DRAGON GAS LTD.
("Green Dragon" or the "Company")
Guizhou Block Update
Green Dragon Gas Ltd. (LSE: GDG), one of the largest independent
companies involved in the production and sale of Coalbed Methane
("CBM") gas in China, is pleased to provide an update of the
exploration and development activities for its Baotian-Qingshan
("GGZ") block in Guizhou Province, PRC.
Background to the block
GDG is the operator with a 60% interest in the GGZ block that
covers a total area of 214,982 acres (870 km2) in Guizhou Province.
PetroChina is the working interest partner with the remaining 40%
interest. The Block is located within the Liupanshui coal field
with coal bearing strata present in the Upper Permian Longtan
Formation. There are a total of 30 coal seams present in the Block
of which seven are currently considered prospective for
development. Total net coal thickness for the prospective seamsin
the areas testedis approximately 66ft (20.1 metres)with two of the
seams (17 & 19) showing coal thickness in excess of 16.4ft (5
metres) each. The average gas content across the seams is
approximately 458.65scf/tone (13 m3/tone). The total gas-in-place
is estimated to be 4.55TCF (129.0BCM)(1).
Current status and objectives
The Company's focus for the GGZ block is to secure approvals for
the Chinese Reserve Report (CRR) from the Ministry of Land
Resources (MLR). CRR is a precursor to approval of the Overall
Development Plan (ODP), expected to be in 2017.
The Company has acquired 219,827 feet (67 km) of 2D seismic over
some of the prospective areasin the block which is the focused area
for the initial CRR application. In addition, the Company has
obtained selected slim-hole data for 585 wells previously drilled
by the Coal Bureau. Using both the seismic and slim-hole data the
Company has established 3D geological models over the block that
will be used to determine future development plans and subsurface
optimisation.
In the exploration phase the Company has drilled a total of 33
wells (21 vertical, 9 directional and 3 LiFaBriC) covering all
seven of the prospective seams. Well testing and gas measurement
analysis has been undertaken in pilot areas and forms the basis of
the commercial assessment, and hence potential, of the gas bearing
layers.
Nine of the 33 wells in GGZ, covering five of the seven most
prospective seams, are currently connected to power and undergoing
dewatering or producing gas. Of these, four wells have established
commercial gas rates in accordance with the MLR guidelines.
Additional potential from shale
In addition to the CBM plays in Guizhou, both Sinopec and
Chevron, among others, have announced shale gas finds in Guizhou
province. Should these finds be confirmed as commercial they could
indicate the potential for shale exploitation within the GGZ block.
While the development of shale prospects is at an early stage in
Guizhou initial exploration results in the region have been
encouraging.
Commercialisation
The GGZ field is proximate to both the China Myanmar Oil &
Gas pipeline and the Guizhou Natural Gas pipeline both of which
could be used as a means to transport gas from the GGZ block to end
users.
Guizhou Province is in southern China and currently sources the
majority its gas needs by pipelines from other provinces. The
development of gas resources within Guizhou itself is expected to
realise enhanced margin as the city-gate pricing, which acts as a
barometer for market price, includes a transportation premium to
encourage delivery to Guizhou. Gas sourced and produced in Guizhou
should benefit from this premium.
The August 2016 City-Gate prices (for provincial capital cities)
published by the NDRC in respect of both industrial and residential
gas are among the top ten highest city-gate prices in China at
$17.43/mcf (4.0RMB/m3) and $13.95/mcf (3.2RMB/m3) respectively
(based on an exchange rate of US$1 - 6.5RMB).
Mr.Randeep S. Grewal, Chairman and Founder of Green Dragon,
commented:
"In accordance with our 2016 objectives announced at our 2016
Capital Markets Day, the GGZ block has progressed from an
exploration block into our development portfolio.The block is an
exciting prospect as it contains multiple prospective coal seams
and is located in Southern China, which has historically been short
on gas production.
"We see GGZ offering considerable additional value to our
shareholders and will be progressing with the CRR and ODP
accordingly during 2017. We believe this can be achieved without
distracting us from our absolute focus on delivering production,
sales and cash from our existing commercial assets in GSS and GCZ
within Shanxi. Realising the potential of the GGZ block is an
exciting objective for the Group in the medium term and one that I
believe will achieve our dual aims of actively participating in the
gas and clean energy revolution in China while providing strong
returns to shareholders. GGZ will be our third commercial block,
following our successes in GCZ and GSS."
Note (1): based on Netherland Sewell & Associates
independent estimates
For further information on the Company and its activities,
please refer to the website at www.greendragongas.com or
contact:
Instinctif Partners
David Simonson / George Yeomans
Tel: +44 20 7457 2020
Citigroup
Tom Reid / Luke Spells
Tel: +44 20 7986 4000
Peel Hunt
Richard Crichton / Ross Allister
Tel: +44 20 7418 8900
About Green Dragon Gas
Green Dragon Gas is a leading independent gas producer with
operations in China and is listed on the main market of the London
Stock Exchange (LSE: GDG). The Company has 549Bcf of 2P reserves
and 2,379Bcf of 3P reserves across eight production blocks covering
over 7,566km(2) of licence area in the Shanxi, Jiangxi, Anhui and
Guizhou provinces. It holds six Production Sharing Agreements with
strong, highly capitalised Chinese partners including CUCBM
(CNOOC), CNPC and PetroChina, and has infrastructure in place to
support multiple routes to monetise gas production.
END
This information is provided by RNS
The company news service from the London Stock Exchange
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