Green Dragon Gas has issued an update on the exploration and development activities for its Baotian-Qingshan block in China's Guizhou Province.
GDG is the operator with a 60% interest in the GGZ block that covers a total area of 214,982 acres. PetroChina is the working interest partner with the remaining 40% interest.
The Company's focus for the GGZ block is to secure approvals for the Chinese Reserve Report (CRR) from the Ministry of Land Resources (MLR). CRR is a precursor to approval of the Overall Development Plan (ODP), expected to be in 2017.
The Company has acquired 219,827 feet (67 km) of 2D seismic over some of the prospective areasin the block which is the focused area for the initial CRR application. In addition, the Company has obtained selected slim-hole data for 585 wells previously drilled by the Coal Bureau. Using both the seismic and slim-hole data the Company has established 3D geological models over the block that will be used to determine future development plans and subsurface optimisation.
In the exploration phase the Company has drilled a total of 33 wells (21 vertical, 9 directional and 3 LiFaBriC) covering all seven of the prospective seams. Well testing and gas measurement analysis has been undertaken in pilot areas and forms the basis of the commercial assessment, and hence potential, of the gas bearing layers.
Nine of the 33 wells in GGZ, covering five of the seven most prospective seams, are currently connected to power and undergoing dewatering or producing gas. Of these, four wells have established commercial gas rates in accordance with the MLR guidelines.
Green Dragon founder and chairman Randeep S. Grewal said: "In accordance with our 2016 objectives announced at our 2016 Capital Markets Day, the GGZ block has progressed from an exploration block into our development portfolio.
"The block is an exciting prospect as it contains multiple prospective coal seams and is located in Southern China, which has historically been short on gas production.
"We see GGZ offering considerable additional value to our shareholders and will be progressing with the CRR and ODP accordingly during 2017. We believe this can be achieved without distracting us from our absolute focus on delivering production, sales and cash from our existing commercial assets in GSS and GCZ within Shanxi.
"Realising the potential of the GGZ block is an exciting objective for the Group in the medium term and one that I believe will achieve our dual aims of actively participating in the gas and clean energy revolution in China while providing strong returns to shareholders. GGZ will be our third commercial block, following our successes in GCZ and GSS."
(LON:GDG) Green Dragon Gas Ltd share price was +5p at 235p