Quest Resource Corp, Oklahoma City, inked an agreement with Alcoa Inc. subsidiary Alcoa Fuels Inc. for a 1-year coalbed methane lease on more than 63,000 acres in Union, Crittendon, and Webster counties, Ky.
The parcel, in the Illinois basin along the Ohio River northeast of Paducah, Ky., will increase by 50% the number of acres Quest has under lease.
"This is the first time that Alcoa has permitted an exploration and production company to drill for coalbed methane gas on its coal mining properties," said Jerry Cash, Quest CEO.
Quest will conduct a technical study during the initial year of the lease to determine the feasibility of developing the property, at which time it may extend the lease by 4 years. Thereafter, Quest generally may continue leasing the parcel while it is continuously drilling at least 25 wells/year until the property is fully developed (about 400 wells on 160 acre spacing).
Quest may continue leasing any portion of the property that has been developed for so long as it is producing CBM from the developed property in paying quantities.