Petromin Participates in Signing Ceremony in Beijing, January 25, 2008
Wednesday, 30 January 2008 Reaching an Agreement With CUCBM to Kick Off First Ever Multi-Well CO2 Injection for Enhanced Coal Bed Methane (ECBM) Project in China
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 30, 2008) - Further to our news release on July 16, 2007, Petromin (TSX VENTURE:PTR) is pleased to announce it has executed the final agreement with China United Coalbed Methane Corp. (CUCBM) to proceed with the first ever mulit-well CO2 injection into deep unmineable coals for enhanced coal bed methane (ECBM) production in China. Signed in Beijing on January 25, 2008 by Petromin, Enviro-Energy International Holdings Limited, and CUCBM, the project will inject carbon (CO2) into deep unmineable coal seams for enhanced natural gas production from these coals.
This project is a continuation of a single well pilot test in Qinshui, Shanxi Province that demonstrated the economic potential of CO2 sequestration for ECBM in China that was jointly funded by the Chinese and Canadian governments in collaboration with the Alberta Research Council Inc.
1. Purpose of the Co-operative Agreement
By the Co-operative Agreement, the parties enter into a co-operation in accordance with the laws of the People's Republic of China. The exclusive purpose of the Co-operation will be to jointly evaluate and implement Deep Un-mineable Coal CO2 Sequestration and Enhanced Coalbed Methane Production in China of which the nature is primarily research to enhance production, recovery, and efficiency in CBM gas production.
2. Term of the Co-operation
The Co-operation begins on the date of execution of the Co-operative Agreement and will continue to be effective in full force for 5 years or until terminated as provided in the Co-operative Agreement.
3. Business Management
A joint project steering committee (the "JPSC") will have full authority to bind the parties in all matters relating to the direction, control and management, including, but not limited to approval of annual work plan and budget of the Co-operation. The JPSC will consist of four representatives, consisting of two from CUCBM, one from Petromin and one from Enviro Energy.
4. Duties of the parties
Each party will be responsible for its respective duties as follows:
CUCBM will be the operator of the Project and will be in charge of all the operational matters in the Project including field testing, data collection, operation, site equipment and materials and providing technicians, engineers, geologists and others to conduct all the necessary work on-site in the first phase of the Project.
Petromin Resources Ltd. / Enviro-Energy International Holdings Limited
Petromin Resources Ltd. / Enviro Energy International Holdings Limited and Alberta Research Council Inc. will conduct the site selection, multi well testing design, simulation work and analysis, including all the engineering and geological analysis in the first phase of the Project.
5. Reasons and benefits of the signing of Co-operative Agreement
The project is a milestone project for the clean development of China's deep CBM reserves. The Project will be a key step towards reducing CO2 emissions (and therefore global warming) while enhancing energy supply. CO2 geological storage is viewed as one of the most promising mechanisms to store large quantities of captured CO2 emissions. The Directors believe that the Co-operative Agreement is in the best interest of the shareholders of the Company as a whole.
6. Venture Interest
Each party will be responsible for their share of the funding which is estimated to be approximately 9.9M RMB of which CUCBM's portion is estimated to be 6.4M RMB and Petromin / Enviro Energy responsible for 3,460,000 RMB. CUCBM will be entitled to 60% of the income, intellectual property and or benefits derived from this venture and Petromin / Enviro Energy will equally split the remaining 40% interest (20/20).
An additional 15M RMB or more will be funded by the parties for the second phase of the Project. The capital contribution of each party in the second phase will be decided by the JPSC through amicable consultation.
Any income derived from activities related to intellectual property, research work, power generation, marketing and sales of natural gas and any other business activity shall be shared accordingly to each party's prorated interest.
In addition, Petromin also participates in China CBM exploration through its shareholding in Terrawest Energy Corp. which holds a Production Sharing Contract in the southern Junggar Basin of Xinjiang Province in partnership with CUCBM and PetroChina. Along with other prospective locations in China, the TWE PSC area in the southern Junggar could be considered a potential location for sequestration test wells.
On behalf of the Board of Directors,
A. Ross Gorrell, Co-Chairman and President