Green Dragon's CBM Concessions
Whilst Green Dragon Fuel is blessed with early creation-sharing contracts it negotiated through Greka Electricity, and those offer you the hope of a number of trillion cubic ft of coalbed methane gasoline, there could be severe obstacles in extracting the methane fuel. In a May 2006 study report, the underwriters warned GDG "faces a blend of undersaturation, very low permeability and low coal seam thickness that can make considerably of this useful resource tough to commercialise." Any versed CBM investor would look the other way after studying this string of hurdles GDG ought to conquer to commercially make the methane gasoline.
Even with this bleak assessment, Smith & Williamson endorsed and backed Green Dragon Fuel. Investigation analyst James Elston wrote, "Nonetheless, innovation by Green Dragon and its environment course Chinese contractors ought to allow significant upgrades in recoverable reserves via time particularly with growing fuel charges." That's the blue sky facet of Green Dragon - generating an uneconomic, but quite huge, project bear fruit. Simply because the coals are undersaturated and because there is low permeability, traditional wells would carry lower productivity of methane gas.
A big vote of self confidence, and which resulted in our writing about this firm, arrived soon after noticing two large names which show up on the company's board of directors: John Turnbull and Stewart John. Previously the Chairman of the Swire Group and Cathay Pacific airways, Turnbull was once a Hong Kong "Taipan." Stewart John has been awarded Order of the British Empire (OBE) and had been element of the Turnbull executive group at Hong Plane Engineering Firm and Cathay Pacific. Mr. John has also been a non-executive director of British Aerospace and Rolls Royce.
A look at the GDG technical crew exhibits power. Not only are all the senior technicians Chinese, but they are verified engineers, drillers or geologists with ties to the oil, gas and/or coal sectors. The chief engineer, Zuo Kefeng, has 23 a long time of drilling knowledge with vertical, horizontal and multi wells. The chief geologist has 20 many years of CBM experience at the coal bureau amount. Operations supervisor Mel Lone has been chief representative and general manager for Greka Energy in China because 2001. Ostensibly, Grewal recruited the crème de la crème.
Of the five production-sharing contracts, which comprise a lot more than 1.6 million acres, some components of their concessions could be sub-financial. Smith & Williamson created a base circumstance between 592 and one,000 bcf net, which would corroborate their valuation of the business of just beneath $one billion. The study analyst voiced, "Further effective appraisal and testing jointly with greater optimization of improvement tactics could make increasing amounts of this huge in-spot reserve economically developable." We would hope so.
The brokerage firm's valuation was achieved on the foundation of among a few and six percent of the GDG's touted gasoline-in-place. Why is that? Of the five concessions, the most sophisticated block is Shizhuang South. The investigation analyst documented the "appraisal of the other licenses (are) currently being relatively immature." Shizhuang South is at present making about 265 mcf per day from pilot wells which feed into a fuel-fired electrical energy generator. The current estimated recoverable reserves from this block stand at 417 bcf (gross), which comprises most of the brokerage firm's valuation of Green Dragon.
It is anticipated by late 2006 or in early 2007, Green Dragon will have gotten approval an overall development program to begin full scale improvement. Further exploration and growth might probably present a larger range Spud in ceremonies were held for simple wells on the Quinyan and Fengcheng blocks during July so further exp
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