COALBED METHANE PROJECTS UNDER WAY IN NORTHEAST CHINA

Advanced Resources international Inc. (ARI) has begun two coalbed methane exploration and development programs in Northeast China.

The first, in cooperation with Shenyang General Gas Co., aims to assess gas production potential in several coal basins near Shenyang, capital of Liaoning province.

The second, in Tangshan, Hebei province, seeks to demonstrate the value of vertical well technology to degasify coal seams of the Tangshan mine before mining and to produce commercial volumes of high BTU methane for use in Tangshan. The Tangshan project is being carried out in conjunction with the Kailuan Coal Administration and China National Coal Import & Export Corp.

ARI is an Arlington, Va., engineering and geological consulting firm.

SHENYANG SETTING

General Gas Corp. (SYG) provides gas to residential and commercial customers in Shenyang. SYG's supply comes mainly from local coke and coal gasification plants, with small amounts produced in nearby Liao He oil field.

Declining conventional gas production from Liao He and extensive pollution problems in coal gasification led SYG to look for other sources of gas to meet growing demand in heavily industrialized Shenyang, a city of 5.4 million persons.

SYG in late 1988 learned of developments in vertical well technology to produce methane from coal seams before mining and growth of the coalbed methane industry in the U.S. Because mining near Shenyang historically has been plagued by high levels of methane emissions, SYG became interested in seeing whether technology developed in the U.S. could be transferred to mines in the area.

SHENYANG OPERATIONS

SYG and ARI began a five well pilot program centered in the northern part of Hongyang coal field, 10 km southwest of Shenyang. Drilling, which started in March 1990, involved one production well and two coreholes.

Target coal seams, being mined in the nearby Hongyang No. 1 mine, were tested for methane content, in situ stress, and permeability. While methane contents were high--350-475 cu ft/ton, in situ stress measurements showed a high horizontal stress and less than 0.1 md permeability. Because of the low permeability, the three wells were not recommended for hydraulic fracturing. They were plugged.

Following the low permeability measured in the area of Hongyang No. 1, SYG and ARI began a detailed exploration program of the southern Hongyang basin near Hongyang No. 3 Mine, the Shen Bei basin with the Gu Cheng Zi mine, and the Tiefa basin with its Daxing and Xiaonan mines.

Geology varies widely among the basin, requiring different exploration and evaluation criteria.

The southern Hongyang basin is an area with two or three thin (1-2 m thick), high rank (low volatile bituminous), coalbeds with a gas content of 400-600 cu ft/ton of coal.

The Shen Bei basin mainly contains one thick (30-40 m), low rank (subbituminous) coal seam with moderate methane content--100-200 cu ft/per ton of coal.

The Tiefa basin contains numerous, thick (8-30 m), moderate rank (medium volatile bituminous) coal seams, with high methane contents--450-800 cu ft/ton.

Based on that evaluation, two or three well sites were selected in each basin for drilling, testing, completion, and production.

Drilling began in the Shen Bei basin last August with two rigs, Well No. 1 was abandoned because of a bit lost in the hole. It was offset by well No. 1 A, scheduled to reach 650-710 m total depth this month. That will be followed by casing and cementing.

ARI will then begin tests of permeability, reservoir pressure, and in situ stress in the main coal zone right after cementing of the well.

In addition to well tests for reservoir conditions, core tests will determine other parameters such as methane content, sorption isotherm, and coal rank.

Results from well and core tests will be modeled to determine the potential for methane production from the mined seam.

After that, two Shen Bei wells will be hydraulically fractured for production tests.

After two Shen Bei wells have been completed, both rigs will move to Tiefa and Hongyang for completion of five more wells with similar testing and evaluation. Positive results from the pilot wells in each basin will be followed by more production well drilling and commercialization of the project.

TANGSHAN PROJECT

The Tangshan project, which began last summer, will consist of two phases.

The first phase, currently under way, calls for drilling, coring, and testing two wells in advance of mining. The second phase will consist of completing one of the wells, drilling and completing four more wells to establish a five spot pilot, fracturing the target coal seams, and production testing.

The project team consists of Kailuan and ARI staff, with work performed in China and the U.S. Training of the Chinese staff in vertical well technology--geologic and engineering--is part of the project plan.