Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zone
Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zone

Wednesday, 08 July 2009


Petromin Resources Ltd. is pleased to announce that Terrawest Energy Corp. (TWE) has indicated that according to data from the field uncovered by Norwest Corporation at the completion of the geological survey and dated June 21, 2009 -, the thickness of the prospective Jurassic Badaowan (“J1B”) formation on TWE Liuhuanggou Project lands is far greater than initially indicated by drilling. The Liuhuanggou Project is located in the southern Junggar Basin of Xinjiang, China.

As disclosed previously, the discovery well LHG 08-03 intersected approximately 350 meters (1,155 feet) of J1B formation prior to reaching total depth in late 2008. The 350 meters intersection included approximately 170 meters (560 feet) of gas-bearing shale. Well LHG 08-03 also intersected 52.3m of the previously known Jurassic Xishanyao J2X coalbed methane target coal seam.

The 2009 geological work began in late May 2009 and has included surveying and mapping of extensive J1B outcrops, shale and coal seam exposures and small-scale surface coal mining sites. The coal seams are excellent geological markers for the J1B and provide references in calculating formation thickness. Geologists were able to survey and map outcrops over distances of 1.25 to 2.5 kilometers (0.75 to 1.5 miles) across the northeasterly striking formation. Taking the dip of the formation into account a true formation thickness of at least 750 meters (2,475feet) can be calculated.

The geologic survey of surface outcrops of the J1B and small mining locations indicate the formation contains prospective shale intervals of indeterminate thickness interbedded with multiple coal seams of up to 6.0 meters (19.8 feet) thickness across the entire survey area.

The Board considers that the confirmation of greater thicknesses of prospective shale as well as multiple interbedded CBM zones provides confidence that TWE has potentially encountered a natural gas accumulation of great merit and importance to China. The next steps of the Liuhuanggou Project will be to further sample, test and analyze the shale and the other formation intervals, delineate the scale of the resource and determine critical reservoir characteristics.

Samples of shale taken from 2008 drilling are currently being analyzed. Additional test drilling at selected locations is expected to begin in late July or August 2009. 

The geological team for the TWE Liuhuanggou Project is headed by Dr. Yulin Li, senior resource scientist for Norwest Corporation. Dr. Li is a respected China coal expert who was the chairman of Xian Branch China Coal Research Institute. In Canada, Dr. Li has been involved with other Norwest professionals in various unconventional natural gas exploration projects in Alberta and British Columbia, Canada.

As previously disclosed, the Liuhuanggou Project has a significant infrastructure advantage in China. The Junggar Basin in Xinjiang is an active hydrocarbon region with existing petroleum and natural gas production and extensive gas infrastructure. At present natural gas pipelines owned and operated by PetroChina Company Ltd. transport gas from producing fields to Urumqi city, a growing local gas market. Another pipeline connects Urumqi to the west-east pipeline, which can transport gas across China to Shanghai and other population centers. A second west-east pipeline to carry imported and eventually, domestic natural gas across China to Guangzhou in the southern province of Guangdong is under construction and crosses the Liuhuanggou Project lands.

 Shale gas exploration and development in North America has blossomed to become the hottest hydrocarbon play on the continent. Several shale gas basins including the Barnett, Woodford, Haynesville, Fayetteville and Marcellus have become large-scale producers with huge reserve bases in North America. Shale gas production in the US has risen rapidly in recent years as production technology evolved, reaching approximately 5Bcf/day in 2008 according to the US Department of Energy.

The apparent thickness of the prospective J1B formation in outcrops and the drilling intersection in Well LHG 08-03 compare favorably with known producing shale gas basins. A comparison is set out below:



Average Thickness

British Columbia

Doig, Doig Phosphate, Montney

300-500 meter^

United States

Barnett Shale

100 meters^

United States

Marcellus Shale

15-75 metresª

Junggar Basin, China

Badaowan J1B

750 meters*

^ Data is obtained from “An Overview of Shale Gas Potential in Northeastern British Columbia”, Levson, V. M., Walsh, W., Adams, C., Ferri, F., Hayes, M., Canadian Society of Petroleum Geologists, 2009[CSPG]

ª Data obtained from Talisman Energy 2008.

# Information obtained from Barnett Shale Energy Education Council 2009 based on 1.4 trillion cubic feet annual total production in 2008.

·          This is the indicated true thickness from geological survey of surface outcrops conducted by Norwest.

·          Other than the data with regards to the Badowan J1B formation, the sources of the data in the above table are independent of Petromin.  The information obtained from the Canadian Society of Petroleum Geologists and the Barnett Shale Energy Council was prepared by industry groups.

Estimates of shale gas reserves and resources are such that industry leaders believe there is sufficient natural gas in North America to support expanded production and greater utilization in electricity generation and automobile transport.

The expansion of the utilization of gas in North America will have a beneficial impact on the environment by lowering greenhouse gas emissions if natural gas use replaces coal and petroleum. The double-edged benefit of increased energy security and improved environmental impact is being widely promoted by industry and well received by governments internationally. The international implications of the expansion of shale gas reserves and production are reflected in the reported meetings of industry leaders with the Energy Secretary of the US in Washington, DC and G8 energy ministers in Rome in May 2009.

TWE holds a 47% interest in the Liuhuanggou Production Sharing Contract (PSC) with China United Coalbed Methane Corp Ltd. (CUCBM) holding the remaining 53%. The PSC was executed on 30 December 2005, came into force on 1 March 2006 after receiving China Ministry of Commerce approval and has a nominal five-year exploration period and a total thirty-year term. TWE is the operator of the Liuhuanggou Project and has the right to explore for, develop produce and sell all natural gas stored in various Jurassic Age geologic formations to a depth of 1,500 meters.

About Petromin Resources Ltd.

Petromin Resources is a progressive international petroleum and natural gas exploration and production company listed Tier 1 on the TSX Venture Exchange. Petromin is a major shareholder in TWE and provides professional services under the terms of a management agreement with TWE.

Contact:  Mike Suk, VP Corporate Affairs 604-682-8831

Website: www.petromin.ca

Forward Looking Statements:

Statements contained in this news release that are not historical facts are forward-looking statements that involve various risks and uncertainty affecting the business of Petromin Resources. Actual results may vary materially from the information provided in this release.

As a result there is no representation by Petromin Resources that the actual results realized in the future will be the same in whole or in part as those presented herein. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ from those contained in the forward-looking statements, are set forth in, but are not limited to, filings that the Company and its independent evaluator have made, including the Company's most recent reports in Canada under National Instrument 51-102.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

On behalf of the Board of Directors,

A. Ross Gorrell

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