G3 Exploration’s development plan for its Chengzhuang (GCZ) coal-bed methane (CBM) block in Shanxi Province has been cleared by the National Development and Reform Commission (NDRC).
China-focused G3, which was formerly known as Green Dragon Gas, said on October 3 that the overall development plan (ODP) approval included the drilling of an additional 147 production wells. This is anticipated to increase capacity to 6.35 bcf (180 mcm) per year. G3 said development would take place over the next two years starting in the fourth quarter of 2018, at a cost of US$55 million, which would be met on a pro-rata basis.
The plan covers 33 square km of the 67-square km licence, which is situated in Qinshui County, in the south-east of Shanxi Province. Recoverable proven reserves are estimated at 176 bcf (5 bcm) of gas, from an ODP figure of 294 bcf (8 bcm) of gas in place (GIP).
G3 has a 47% participating interest in the project alongside state-controlled China National Petroleum Corp. (CNPC), which holds the remaining 53%. The field is jointly managed by the two partners and has been profitable since gas production started in 2015. So far, 114 wells have been drilled on the acreage, of which 85 wells are selling gas.
G3’s chairman, Randeep Grewal, said the approval had simplified the future expansion and development of the commercially producing area within the block. Citing the push for gas as an energy source in China, he said the GCZ approval should be followed by a go-ahead for an ODP for the Zaoyuan section of the Shizhuang South (GSS) block. The latter is 50 square km in size and is expected to be the first of several ODPs within the 388-square km GSS licence.
G3 reported a net loss of US$24.6 million for 2017, attributed mainly to the company discontinuing its downstream sales business in China. G3 holds joint venture contracts for seven CBM blocks in several Chinese provinces, but only two are in production so far.