Fortune Drills 4 Wells in Chinese CBM Project

Fortune Oil has completed drilling 4 horizontal wells on its Liulin coal bed methane (CBM) project in China.

Two of the wells have already been de-watered and are collectively producing 18,689 cubic meters of gas per day – or 660,000 cubic feet per day.

The company stressed that both are commercially viable with these production rates and furthermore the flows can materially increase as the wells are optimised.  The other two wells are still de-watering.

"We are extremely pleased with the progress of the Liulin block which is a key part of our overall CBM strategy in China (for end-to-end gas from production to consumption),” chairman Qian Benyuan said.

Concurrently Fortune revealed that its cornerstone investor Dart Energy Ltd has decided to exercise an option to take a 45 percent stake in Fortune’s Chinese CBM subsidiary - Fortune Liulin Gas Co Ltd (FLG).

FLG is developing and operating the Liulin block as part of a 50-50 joint venture with China United Coal Bed Methane (CUCBM).
Dart will invest US$8.7 million in two tranches, with the second expected by 30 March 2011.

FLG will use the money to fund additional reserve certification, development planning and submitting the Overall Development Plan (ODP) for the block.  Benyuan added: “We look forward to applying for ODP in 2011 and if successful Fortune Oil will be the 1st foreign company to be granted ODP in China."

Source: China Coal Resource