Gulf Resources' Chinese Gas Project Could Start Production in Oct-Nov

Nasdaq listed Gulf Resources on Tuesday said it expects production to commence from its gas project in Sichuan in October or November.

The company said it has signed the agreement to purchase the equipment needed for drilling and converting the natural gas. It has also constructed the roads and related infrastructure needed to begin operations in the remote and mountainous region of Daying county.

The total capital expenditures in 2016 should be approximate $3 million. This total includes equipment, roads, and all other related expenses, the company stated.

Gulf Resources plans to conducted trial production for three to six months. After this period of time, it expects to produce at maximum levels step by step. “At the present time, based on the studies we have completed, we estimate the well should be able to produce at maximum levels for a minimum of 10 years.”

Once the company achieves maximum output, it will be in a position to evaluate plans for additional wells. It could drill 3-4 new wells in 2017. “Based on the results of these wells, we could accelerate our development in 2018.”

The next group of wells should cost approximately $8 million.