Texaco China BV has signed production sharing contracts with China United Coalbed Methane Corp. in Beijing to explore three blocks in northwestern China for coalbed methane.
Texaco will explore the blocks, which cover 6,897 sq km, over a 5-year period. With these contracts, Texaco has signed eight PSCs with China United.
Officials claim the three blocks, in the Zhungeer region in Inner Mongolia, Shengfu region in Shaanxi province, and Debao region in Shanxi province, contain an estimated 1 trillion cu m of methane.
The contract provides for an exploration period to be followed, if resources are commercial, by phased development and production periods.
Texaco will bear all the risks and expenses for the exploration. If a commercial discovery is made, Texaco will take a 63% stake in the field and the Chinese company the rest.
Last year, China United let another coalbed methane contract to Greka Energy Corp. of the US. The $4.6 million contract required the drilling of drill 10 exploration wells at Fengcheng in East China's Jiangzi province.
China has the world's second largest coalbed methane reserves after the US, with geological resources standing at 30 trillion-35 trillion cu m.