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Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zone
7/8/2009 11:08 PM - Canada NewsWire
VANCOUVER, Jul 8, 2009 (Canada NewsWire via COMTEX News Network) --
PetrominResources Ltd. is pleased to announce that Terrawest Energy Corp. (TWE)has indicated that according to data from the field uncovered byNorwest Corporation at the completion of the geological survey anddated June 21, 2009 -, the thickness of the prospective JurassicBadaowan ("J1B") formation on TWE Liuhuanggou Project lands is fargreater than initially indicated by drilling. The Liuhuanggou Projectis located in the southern Junggar Basin of Xinjiang, China.
Asdisclosed previously, the discovery well LHG 08-03 intersectedapproximately 350 meters (1,155 feet) of J1B formation prior toreaching total depth in late 2008. The 350 meters intersection includedapproximately 170 meters (560 feet) of gas-bearing shale. Well LHG08-03 also intersected 52.3m of the previously known Jurassic XishanyaoJ2X coalbed methane target coal seam.
The 2009 geological workbegan in late May 2009 and has included surveying and mapping ofextensive J1B outcrops, shale and coal seam exposures and small-scalesurface coal mining sites. The coal seams are excellent geologicalmarkers for the J1B and provide references in calculating formationthickness. Geologists were able to survey and map outcrops overdistances of 1.25 to 2.5 kilometers (0.75 to 1.5 miles) across thenortheasterly striking formation. Taking the dip of the formation intoaccount a true formation thickness of at least 750 meters (2,475 feet)can be calculated.
The geologic survey of surface outcrops ofthe J1B and small mining locations indicate the formation containsprospective shale intervals of indeterminate thickness interbedded withmultiple coal seams of up to 6.0 meters (19.8 feet) thickness acrossthe entire survey area.
The Board considers that theconfirmation of greater thicknesses of prospective shale as well asmultiple interbedded CBM zones provides confidence that TWE haspotentially encountered a natural gas accumulation of great merit andimportance to China. The next steps of the Liuhuanggou Project will beto further sample, test and analyze the shale and the other formationintervals, delineate the scale of the resource and determine criticalreservoir characteristics.
Samples of shale taken from 2008drilling are currently being analyzed. Additional test drilling atselected locations is expected to begin in late July or August 2009.
Thegeological team for the TWE Liuhuanggou Project is headed by Dr. YulinLi, senior resource scientist for Norwest Corporation. Dr. Li is arespected China coal expert who was the chairman of Xian Branch ChinaCoal Research Institute. In Canada, Dr. Li has been involved with otherNorwest professionals in various unconventional natural gas explorationprojects in Alberta and British Columbia, Canada.
As previouslydisclosed, the Liuhuanggou Project has a significant infrastructureadvantage in China. The Junggar Basin in Xinjiang is an activehydrocarbon region with existing petroleum and natural gas productionand extensive gas infrastructure. At present natural gas pipelinesowned and operated by PetroChina Company Ltd. transport gas fromproducing fields to Urumqi city, a growing local gas market. Anotherpipeline connects Urumqi to the west-east pipeline, which can transportgas across China to Shanghai and other population centers. A secondwest-east pipeline to carry imported and eventually, domestic naturalgas across China to Guangzhou in the southern province of Guangdong isunder construction and crosses the Liuhuanggou Project lands.
Shalegas exploration and development in North America has blossomed tobecome the hottest hydrocarbon play on the continent. Several shale gasbasins including the Barnett, Woodford, Haynesville, Fayetteville andMarcellus have become large-scale producers with huge reserve bases inNorth America. Shale gas production in the US has risen rapidly inrecent years as production technology evolved, reaching approximately5Bcf/day in 2008 according to the US Department of Energy.
Theapparent thickness of the prospective J1B formation in outcrops and thedrilling intersection in Well LHG 08-03 compare favorably with knownproducing shale gas basins. A comparison is set out below:
Location Formation Average Thickness
British Columbia Doig, Doig Phosphate, 300-500 meter*
United States Barnett Shale 100 meters*
United States Marcellus Shale 15-75 metres(xx)
Junggar Basin, China Badaowan J1B 750 meters(xxx)
* 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
(xx) Data obtained from Talisman Energy 2008.
(xxx)Information obtained from Barnett Shale Energy Education Council
2009 based on 1.4 trillion cubic feet annual total production
- 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
Estimatesof shale gas reserves and resources are such that industry leadersbelieve there is sufficient natural gas in North America to supportexpanded production and greater utilization in electricity generationand automobile transport.
The expansion of the utilization ofgas in North America will have a beneficial impact on the environmentby lowering greenhouse gas emissions if natural gas use replaces coaland petroleum. The double-edged benefit of increased energy securityand improved environmental impact is being widely promoted by industryand well received by governments internationally. The internationalimplications of the expansion of shale gas reserves and production arereflected in the reported meetings of industry leaders with the EnergySecretary of the US in Washington, DC and G8 energy ministers in Romein May 2009.
TWE holds a 47% interest in the LiuhuanggouProduction Sharing Contract (PSC) with China United Coalbed MethaneCorp Ltd. (CUCBM) holding the remaining 53%. The PSC was executed on 30December 2005, came into force on 1 March 2006 after receiving ChinaMinistry of Commerce approval and has a nominal five-year explorationperiod and a total thirty-year term. TWE is the operator of theLiuhuanggou Project and has the right to explore for, develop produceand sell all natural gas stored in various Jurassic Age geologicformations to a depth of 1,500 meters.
About Petromin Resources Ltd.
PetrominResources is a progressive international petroleum and natural gasexploration and production company listed Tier 1 on the TSX VentureExchange. Petromin is a major shareholder in TWE and providesprofessional services under the terms of a management agreement withTWE.
Forward Looking Statements:
Statements contained inthis news release that are not historical facts are forward-lookingstatements that involve various risks and uncertainty affecting thebusiness of Petromin Resources. Actual results may vary materially fromthe information provided in this release.
As a result there isno representation by Petromin Resources that the actual resultsrealized in the future will be the same in whole or in part as thosepresented herein. Actual results may differ materially from the resultspredicted, and reported results should not be considered as anindication of future performance. Factors that could cause actualresults to differ from those contained in the forward-lookingstatements, are set forth in, but are not limited to, filings that theCompany and its independent evaluator have made, including theCompany's most recent reports in Canada under National Instrument51-102.
<< Neither TSX Venture Exchange nor itsRegulation Services Provider (as that term is defined in the policiesof the TSX Venture Exchange) accepts responsibility for the adequacy oraccuracy of this release. On behalf of the Board of Directors, A. RossGorrell >>
SOURCE: Petromin Resources Ltd.
Mike Suk, VP Corporate Affairs, (604) 682-8831, Website: www.petromin.ca
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