Terrawest commits to drilling of up to 3 CBM wells in its Junggar Liuhuanggou PSC
Terrawest commits to drilling of up to 3 CBM wells in its Junggar Liuhuanggou PSC

Friday, 30 May 2008

TSX.V Symbol: PTR


VANCOUVER, May 30 /CNW/ - Terrawest Energy Ltd. (TWE), is pleased to announce it has committed to drilling 3 exploratory test wells to evaluate coalbed methane resources (CBM) on its 655 sq km (253 square miles) Production Sharing Contract (PSC) acreage in Liuhuanggou area of, Xinjiang province, P.R. China. (See figure A for Project Map) One of the test wells will drill deep into the Jurassic Badaowan Formation for initial exploration of the prospective coal seams in this formation and evaluate other sand formations with gas potential. TWE did not test the deeper Badaowan coal seams in previous drilling in 2006. The total drilling commitment in this program will not be less than $1.5 million US and the Company anticipates commencing drilling before the end of next quarter ending September 30, 2008. Geological and engineering evaluations are currently ongoing and drilling locations have already been identified and visited by Petromin's engineer, Ryan Adams and TWE representatives. Drilling contractors have now been interviewed in China in preparation for the implementation of the 2008 drilling program in Xinjiang Province, P.R. China.


TWE holds 47% of the Liuhuanggou PSC signed between Terrawest and China United Coalbed Methane (CUCBM) in December, 2005. The PSC is on a PetroChina lease area and represents the first and only foreign CBM PSC signed on a PetroChina lease block in China. TWE is operator. Three drill holes were previously drilled in the acreage and intersected coal seams with an aggregate thickness of over 40 meters. Gas desorption from the drill holes indicated a gas content of 65-100 Scf/ton. Preliminary calculations indicated more than 8 Bcf per square mile (section) of gas potential in the areas where the intersected coal seams are well developed. As indicated, this gas potential does not include the deeper Badaowan formation coal seams.


To encourage the development and production of domestic CBM, the Chinese Government has: 1) waived value-added tax on CBM gas production, 2) given CBM gas priority over conventional gas for pipeline access and 3) granted a price subsidy for CBM gas sales. The PSC is located on the southern margin of the Junggar sedimentary basin, which is a productive petroleum and natural gas region considered highly prospective for CBM based on the extensive coal resources. There are a number of active coal mines in the southern sector of the Junggar basin and new CBM exploration projects have been recently announced.


There is an existing natural gas pipeline infrastructure in the vicinity of the Terrawest PSC that carries conventional natural gas to the nearby provincial capital city of Urumqi, and links the area to the major trans-national West-East pipeline. The Junggar Basin is targeted for further oil and natural gas pipeline development. The preliminary estimate of CBM potential for the whole Junggar Basin, as reported by CUCBM, is 69 Tcf (approx 2 Trillion cubic meters).


Petromin Resources is a major shareholder in TWE and provides management and other services under the terms of a management services agreement.


On behalf of the Board of Directors,


A. Ross Gorrell

Co-Chairman and President


%SEDAR: 00003156E



For further information: Petromin Resources Ltd., 390-1090 W. Georgia

St., Vancouver, B.C., V6E 3V7, T. (604) 682-8831, F. (604) 682-8683


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