VANCOUVER (Yosefardi) – CBM Asia Development Corp. and its operating partners have successfully drilled and tested a total of eight coalbed methane exploration wells at two Production Sharing Contract (PSC) areas in Indonesia.
This resulted in 981 Bcf of recoverable prospective resources net to the company, given the company has raised a total of $34 million to date, this equates to overall finding costs of approximately $0.03/Mcf. The CBM gas sales price in Indonesia ranges from $7.50 to nearly $20/Mcf.
The Company’s first CBM test well, also Indonesia’s first CBM exploration well, was drilled in 2009 by operating partner Medco Energi at the Sekayu PSC in South Sumatra. Core recovery was poor due to mechanical problems.
However, geophysical logs confirmed the presence of thick coals with strong gas kicks. After the well was drilled, coal seam permeability was successfully measured in-situ at 500 mD. In 2011 contractor Weatherford re-entered the well to conduct critical desorption tests, measuring methane saturation levels of up to 95%. Apart from the early coring mishap, this well provided a complete set of geologic data for resource evaluation.
The following seven wells drilled by the company and its operating partners were operationally successful and provided complete geologic data for resource evaluation. Core recovery rates in the seven wells averaged over 90%. Gas content measured on the core ranged from 75 to 359 ft3/ton (dry, ash-free basis), much higher than at the analog Powder River Basin in the USA (current CBM production 830 million ft3/day).
Most recently, 5-millidarcy permeability was measured in three coal seams at the KW-CBM-1 well, comparable to that of the USA Central Appalachian Basin where Consol Energy currently produces 240 million ft3/day.
Qualified Reserves Evaluator Netherland, Sewell and Associates, Inc. (NSAI) has independently evaluated these data and estimated 981 Bcf of recoverable prospective gas resources, net to the Company. NSAI has estimated the overall probability of commerciality at 50%. Subsequently, gas flow and permeability tests have been conducted further derisking the assets. The two blocks evaluated by NSAI represent just 6% of the company’s total net acreage in Indonesia.
CBM gas prices in Indonesia range from $7.50/Mcf for local power generation at VICO’s Sanga-Sanga PSC to nearly $20/Mcf for gas exported from the Bontang LNG facility.2 If the company is successful at producing and selling its 981 Bcf at these prices, gross revenues could range from $7.5 to nearly $20 billion.