Green Dragon Gas Ltd. (LON:GDG) has put into development another one of their unconventional Chinese gas blocks. Baotian-Qingshan (GGZ) located in the Chinese province of Guizhou is a joint venture in which Green Dragon has a 60% stake and PetroChina has a 40% stake.
A coal bed methane development is showing 7 coal seams that are being considered prospective. The total gas reserves are estimated at approximately 4.55 trillion cubic feet.
Green Dragon also stated that they have filed with the Ministry of Land Resources to receive approval on the Chinese Reserve Report (CRR), which is necessary to then get the overall development plan (ODP) approved. This will likely take place in 2017.
All 7 of the prospective seams were explored through the drilling of 33 wells, of which 9 were directional, 21 vertical and 3 LiFaBric.
Nine of the wells have already been hooked up to electricity and are either going through dewatering or have started gas production. These wells are located on five of the seams that have shown the most potential. Of the nine wells, four are already producing at commercial levels.
Furthermore, Chevron, Sinopec and others have already stated they’ve found shale gas in the same province, which means there’s a change that the GGZ block also has shale.
The Guizhou Province is in the southern part of the country and, at the moment, has the highest prices on gas, both industrial and residential, in all of China.
The chairman of Green Dragon, Randeep Grewal, stated that because of the numerous prospective coal seams and its location in Southern China that has always had a shortage in production of gas, the GGZ block is an excellent prospect for the company.
Moving ahead with the Chinese Reserve Report and the overall development plan in 2017 could be done without causing too much of a distraction from the other two commercial assets the company has in GCZ and GSS in the Shanxi region.