Sino Gas ups reserves in China

March 10, 2016

Australian company Sino Gas and Energy’s 2P reserves in the onshore Ordos basin in China increased 22% to 1962 Bcf, with the group’s share amounting to 552 Bcf.

The increase in reserves was driven by a positive revision of reserves in Linxing (West) and Sanjiaobei and new reserves bookings in Linxing (East), Sino Gas said.

Reserves on Linxing (West) and Sanjiaobei have been revised up after incorporating the results of the 20 wells drilled in 2015, 25 well tests across 20 wells and results of the pilot production to date. Gross 2P reserves on Linxing (West) and Sanjiaobei have been revised up 16% due to an increase in the estimated recovery factor offset by a reduction in estimated gas initially in place of 6%.

Based on the discovery of gas pay and demonstration of commercial flow rates in multiple zones in the Linxing (East) prospective area, the first reserves and contingent resources have been assigned to this area. The discovered area on Linxing (East) is now 40sq km of which 36sq km is classified as reserves.  A further 294sq km is classified as prospective resources.

Gross 2P reserves are 103 Bcf on Linxing (East) with an additional 80 Bcf gross 2C contingent resources and 982 Bcf P50 prospective resources. Sino Gas’s share amounts to 32 Bcf of 2P reserves, 25 Bcf of 2C contingent resources and 290 Bcf of P50 prospective resources.  

Moreover, the commencement of the Linxing central gas station has expanded the portion of reserves classified as developed and producing to 52 Bcf gross from 24 Bcf in 2014. Total production over the year from the two central gathering stations totaled 1.5 Bcf.

RISC Operation, which completed the assessment of the reserves and resources for Sino Gas’ production-sharing contracts (PSCs) in the Ordos basin estimates the net present value of the firm’s 2P reserves to be US$1.3 billion.

Subject to shareholder approval, Sino Gas said the joint venture plans to execute a $60 million budget, with the firm’s share of the budget being 49%. The program is designed to progress a Chinese reserve report and overall development plan (ODP) approvals and maximize production from the two existing central gathering stations in order to fully utilize the installed capacity of 25 MMscf/d.

Commenting on the outcome, Sino Gas’ managing director Glenn Corrie said, “This increase in reserves was driven in part by our continuing refinement of our sub-surface model and in part by our successful exploration program in Linxing (East).

“The company has made significant progress in realizing the value of our reserves with the commencement of pilot production from both PSCs and the recent receipt of payments,” he said.

“Our pilot program is designed to derisk both subsurface and commercial risks ahead full field development after ODP approval, currently anticipated in 2017. The company's focus is now on continuing to commercialize our significant reserves, increase production and cash flow and prepare for full field development."



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