Fortune Oil PLC, Hong Kong, said it is starting to see commercial gas flow rates from horizontal wells at its Liulin coalbed methane project in Shanxi Province of northern China (see table, OGJ, Sept. 6, 2010, p. 86).
Field production from three horizontal wells is close to 500 Mcfd of gas and increasing, with the H3 well accounting for half the output, with 2 MPa bottomhole pressure. The three wells average 4,600 m of connected coal. The company plans to reduce bottomhole pressure to around 0.2 MPa eventually.
The company has drilled two more horizontal wells in 2012. The five wells are expected to produce sufficient volumes to meet requirements of the existing gas sales agreement, which is for as much as 3.5 MMcfd at $7.10/Mscf (US).
Initial gas sales from Liulin field will be via a compressed natural gas wholesale station that is under construction and expected to be ready for operation in the second half of 2012. Fortune Oil has completed engineering design of the gas gathering system and an engineering, procurement, and construction contract is in place to install it. Gas sales are to start in early 2013.
The overall development plan is to be submitted in 2012. The 50-50 partnership with Dart Energy Ltd., Brisbane, ensures successful drilling of the wells, Fortune Oil said.