TWE Issues NI 51-101 compliant CBM Contingent Resource and Gas Initially in Place (GIIP) estimate for Liuhuanggou Project
Monday, 21 June 2010
Petromin Resources Ltd. (TSX.V: PTR) ("Petromin") is pleased to announce that Terrawest Energy Corp. ("TWE") has reported that a NI 51-101 and Canadian Oil & Gas Evaluation (COGE) Handbook compliant evaluation report on the CBM resources has been completed for a portion of its Liuhuanggou Project lands in Xinjiang, China. The report was completed by Norwest Corporation.
The Report provides an estimate of CBM Contingent Resources which ranges from (Low) 31.29 to (High) 244.18 billion cubic feet ("Bcf") with a Best estimate of 68.26 Bcf for the evaluation area.
Contingent Resources are the estimated recoverable of the estimated gas initially in place ("GIIP") and a recovery factor of 46.3% was used in the evaluation, taking into account the differing recovery estimates for different individual coal seams. GIIP ranges from (Low) 70.00 to (High) 514.07 billion cubic feet ("Bcf") with a Best estimate of 147.43 Bcf for the evaluation area.
Based on the best estimate area for each of the Jurassic Xishanyao ("J2X") formation and the Jurassic Badaowan ("J1B") formation, the Contingent Resources represent 4.63 Bcf/section and an additional 8.71 Bcf/section for the J1B for an aggregate 13.34 Bcf/section. The GIIP represents 10.3 Bcf/section for the J2X alone and an additional 16.4 Bcf/section for the J1B for an aggregate 26.7 Bcf/section. (A section is a square mile.)
The Report focuses on 13.59 sections (8698 acres) or 5.36% of the 255 section (163,200 acre) production sharing contract ("PSC") area for its best estimate of GIIP. Of the total area, 12.29 sections (7,865 acres) relate to the J2X coal seams and 1.3 sections (832 acres) relate to the J1B coal seams. The evaluation area is only a small portion of the total PSC area since CBM exploration drilling is supported by existing coal exploration drilling in the target coal seams within that area. Such coal exploration drilling data is required to meet the NI 51-101 standard of resource reporting and is also available for substantial additional portions of the PSC which is an active coal mining area that has been previously extensively drilled for coal resource studies.
The report completed by Norwest Corporation was authored by Geoff Jordan, P. Geol, Qualified Person.
As previously reported, TWE also successfully completed a gas flow test within the evaluation area, during which CBM was produced from the J2X and flared.
The results clearly indicate the CBM potential of the two target coal seam packages, the Jurassic J2X and J1B, when taken together. The Liuhuanggou Project lands are unique in offering on the one hand a sequence of a few coal seams with great total thickness (3 main seams up to 50m total intersected thickness) in the J2X and on the other hand a sequence of 20-30 thinner coal seams in the J1B with aggregate gross thickness of over 25m.
Discovered Gas Initially-In-Place ("GIIP", equivalent to discovered resources) is that quantity of natural gas that is estimated, as of a given date, to be contained in known accumulations prior to production. Contingent Resources are those quantities of natural gas estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates. The COGE Handbook requires that the range of values, "Low", "Best" and "High" be shown in the evaluation results
There is no certainty that it will be commercially viable to produce any portion of the resources referenced in this release.
This gas resource estimate does not include rocks, including carbonaceous mudstone or shale, surrounding the coal seams used in the NI 51-101 compliant calculations. The gas content and thickness of these rocks has been analyzed separately and any gas resources will be additional to the CBM in coal seams.
The Liuhuanggou Project lands are located adjacent to Urumqi, the capital city of Xinjiang, China. The area is served by existing gas pipeline infrastructure including the Wu-Shan pipeline which links Urumqi to the 1st West-East pipeline and the 2nd West-East ("WE2") pipeline which runs from the western boundary of Xinjiang to Guangdong in southeast China. WE2 runs across the Liuhuanggou Project lands.
TWE holds a 47% interest in the PSC which was executed on 30 December 2005 with China United Coalbed Methane Corporation Limited and is currently administered by PetroChina Coalbed Methane Company Limited (PCCBM). The PSC defines CBM as all gas mainly consisting of methane (CH4) stored in four named geological formations of Jurassic age to a depth of 1,500m.
The central government of China recently introduced a new economic development policy for Xinjiang which will see substantial increases in infrastructure construction and other steps to accelerate economic development, including energy resource development. The specific regional focus of the economic policy is considered unprecedented in China.
In a second announcement intended to stimulate natural gas exploration, development and production within the country the central government of China increased natural gas prices across the board by 25% effective 1 June 2010.
About Petromin Resources Ltd.
Petromin is progressive international petroleum and natural gas exploration and Production Company listed Tier 1 on the TSX Venture Exchange. Petromin was ranked 24th of the Top 100 Fastest Growing Companies in BC by Business in Vancouver in 2009 based on a 704% revenue increase over the past 4 years. Petromin currently holds 30.55% of the issued shares of TWE and provides professional services under the terms of a management agreement with TWE.
On Behalf of the Board of Directors
Dr. A Ross Gorrell
Co-Chairman and President
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.
SOURCE Petromin Resources Ltd.
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