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CNPC OKs Chengzhuang block development

Written by  Tuesday, 18 April 2017 22:19
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China National Petroleum Corp. (CNPC) has approved the overall development plan for the prolific Qinshui basin, Chengzhuang cooperative coal bed methane block (GCZ block), located in the Shanxi province onshore China.

The GCZ block with an area of 67sq km and situated approximately 20km south of the Greka Shizhuang south main block, is a joint venture between CNPC and London-listed Green Dragon Gas.  

CNPC has 53% operating interest in the production sharing contract while Green Dragon holds the remaining 47% stake.

To-date, 114 wells have been drilled on the acreage. The C$53.80 million development plan includes the drilling of an additional 147 production wells in 2017 and 2018. CNPC will invest $28.51 million and Green Dragon $25.28 million.

According to Randeep Grewal, chairman and founder of Green Dragon, this a significant step forward for the company and a further realization of their strategy of progressing resource base through long-term production. 

He said the GCZ block overall development plan, while only 0.44% of the group’s total acreage, it fairly represents the profit potential of Green Dragon's asset portfolio.

“In this investment, $45.5 million was invested between 2009-16, during which 114 wells were drilled and on commencement of production, the costs were recovered leading to net cash flow returned as dividends to the parent from October 2015. Green Dragon has been carried for all development capex and cost in relation to GCZ,” he added.

Upon the successful completion of the development plan, the 2016 estimated current probable reserves at GCZ of 15.7 Bcf are expected to be migrated to 1P reserves, bringing total 1P reserves to 29 Bcf.

Furthermore, the estimated gross annual production of 3.01 Bcf in 2017, is expected to increase to 3.23 Bcf in 2018. This comprises of 2.64 Bcf from existing wells and 0.59 Bcf from new wells. 

Image: Green Dragon employee in China / Green Dragon

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