By OGJ editors
HOUSTON, Apr. 19 -- Fortune Oil PLC and Molopo Australia Ltd. have signed a conditional agreement to jointly develop coalbed methane (CBM) reserves in the Liulin Block, Hedong field, in Shanxi Province, China.
Fortune Oil will acquire a 60% interest in a new company, Fortune Liulin Gas Co. Ltd., while Molopo will hold 40%.
A Molopo subsidiary, Lowell Petroleum NL, began exploring the Liulin Block more than 10 years ago. It drilled four vertical exploration wells in 2000 under a production sharing contract (PSC) with China United Coal Bed Methane Co., a government entity.
Molopo's rights in the PSC will be extended and transferred to the new company, subject to approval by the Ministry of Commerce.
Fortune Oil initially will commit $2.5 million for further field appraisal. If successful, commercial development of the block is expected after 2 years.
The Liulin Block covers 198 sq km with an in-place gas resource of about 800 bcf. Gas recovered to date is more than 95% methane. It occurs in three main coal seams at 400-700 m.