Arrow signs LOI with PetroChina

Arrow Energy has signed a Letter of Intent with major Chinese government....

  Arrow Energy has signed a Letter of Intent with major Chinese government-owned oil and gas company, PetroChina to negotiate a Production Sharing Contract covering natural gas, including coal bed methane, over the 4,000sqkm Dajing block in the Junggar basin of Xinjiang Autonomous Region in northwest China.The Junggar basin is an area already producing conventional gas, supplying the major east-west pipeline connecting to Beijing and Shanghai. In Beijing for the signing ceremony, Arrow’s Chief Executive Officer, Nick Davies said: “This is a very important step forward in Arrow’s China strategy. We have carefully selected an area that we consider to be very prospective for coal bed methane that is close to strong local markets, including the provincial capital of Urumqi – a city of over 4 million people, and within 70km of the east-west pipeline.” The Dajing Block contains substantial coal resources, estimated to be in excess of 250 billion tonnes, with seams up to 70m thick. Preliminary data indicates that the rank of the coal is ideal for coal bed methane development. Based on preliminary geological data, Arrow’s gas in-place exploration target could be as much as 35 trillion cubic feet (TCF). “This could be an enormous resource,” Mr Davies said. “In comparison, the Powder River Basin, in the western USA, which has over 25,000 producing coal bed methane wells, has about 25 TCF gas in place.”Following completion of negotiation of the Production Sharing Contract, Arrow said its plans included drilling up to 20 exploration wells over the following eighteen months to define the reservoir extent and refine the gas in-place estimates. Following successful exploration, Arrow will require a number of pilots to instigate flow and determine the best method for developing the coal bed methane resources of the Dajing block. “Arrow is delighted to be working with a company of PetroChina’s experience and stature and we look forward to developing the area for China’s first long-term gas supply agreements from coal bed methane,” Mr Davies said.