PETROCHINA Co has signed a letter of intent with Arrow Energy NL to explore for coal-bed methane in northwestern China, the Australian company said yesterday.
Under the initial accord, China's largest oil and gas firm and Arrow Energy will negotiate a production-sharing contract covering natural gas including CBM over the 4,000-square-kilometer Dajing block in Junggar basin in Xinjiang Uygur Autonomous Region.
Arrow Energy said the Dajing block contains substantial coal resources estimated to be in excess of 250 billion tons with seams of up to 70 meters thick, adding preliminary data indicates that the rank of the coal is ideal for CBM development. The block could hold 35 trillion cubic feet of CBM, it said.
CBM, a cleaner-burning fuel, is a natural gas extracted from coal seams.
"This could be an enormous resource," Arrow Energy's chief executive officer Nick Davies said. "In comparison, the Powder River Basin, in the western USA, which has over 25,000 producing CBM wells, has about 25 trillion cubic feet gas in place."
Following completion of talks of the production-sharing contract, Arrow Energy said it plans to drill up to 20 exploration wells over the following 18 months to better determine the volume of coal-seam gas that may be recovered.
Xinjiang's Junggar basin is an area already producing conventional gas, supplying the China's west-east pipeline connecting to Beijing and Shanghai.
Davies said they look forward to developing the area for China's first long-term gas supply agreements from CBM.