Rick Wilkinson
OGJ Correspondent
MELBOURNE, Nov. 24 -- Arrow Energy Ltd., Brisbane, has extended its operations in China by signing a heads of agreement with Bin Chang Mining Group to develop coal seam methane (CSM) in Shaanxi Province.
Arrow and Bin Chang will begin a pilot well drilling program to assess the potential surface mine degassing and CSM production in an area that covers 360 sq km within Bin Chang's coal mining licenses.
The region has a good coal resource data base, according to Arrow, and it has been explored using closely spaced core holes that have defined a coal resource of 6,000 billion tonnes of coal. The estimated in-place CSM resource exceeds 1 tcf.
Arrow says the program will have dual benefits of gas production and improved mine safety.
Bin Chang will cover program costs, and Arrow will design and operate the work, using technology it developed in Australia. It will be Arrow's first CSM drilling project in China and the first program to use Arrow's surface to in-seam horizontal well technology for mine drainage.
If commercial volumes of gas are produced in the pilot program, the two parties will enter into a formal joint venture to develop CSM over the entire license area. The pilot program is expected to be completed by mid-2009.
Arrow also has been awarded a CSM business development license for its earlier joint venture with the Urumqi Geological Exploration Development Co. of the Xinjiang Geological Survey.
The license, the first of its type granted by the Xinjiang provincial government, provides access to the CSM opportunities in the coal mining areas of the province.
