CBM Asia updates results of CBM exploration well in S. Sumatra
Thursday, December 3 2009 - 12:03 AM WIB
Medco drilled CBM-SE-02 exploration core well in September 2009 to a depth of 1,959 feet penetrating the upper Palembang B and C, and lower Pangadang A coal seams, within the Maura Enim Formation, recording a net coal thickness of approximately 90 feet. An injection/fall off test on the 40 foot Palembang B seam to determine in situ permeability was conducted by Medco. Permeability results for the Palembang B coal seam, per an analysis by Ancell Engineering of Houston, Texas, indicate very high permeability, greater than 500 millidarcies (md), consistent with the results calculated by the operator. Other seams indicated substantially similar characteristics on wireline logs and were not tested by the operator as the additional cost of doing so did not appear warranted on a cost/benefit analysis.
As reported earlier, core recoveries from the Palembang B and C and Pangadang A were low, averaging 15%, due primarily to the friable nature of the coals and the core catcher in the core barrel used. On-site gas content measurements were made and additional samples were stored in sealed canisters for analysis by the Centre for Geological Survey, Geological Agency of Indonesia in Bandung. Reported gas contents ranged from 10 to 23 standard cubic feet per ton. Medco has advised that they consider these results inconclusive. Brisbane-based Consolidated Seam Gas Services, independent auditors hired by CBM Asia to audit onsite core recovery and analysis of coal cores, cited several potential irregularities in the collection and analysis process including longer than recommended retrieval times for core recovery. The Company believes such retrieval times, in some cases in excess of 45 minutes according to the Company's calculations, coupled with the high permeability of the coal may have resulted in significant loss of gas before the samples were analyzed. Further, nitrogen content in the range of 24 to 35% in the sample canisters suggests potential air contamination. Isotherm analyses of two Pandagang A coal samples are pending from Core Lab Petroleum Service's Denver lab. Five coal samples from the Palembang C have also been sent to a lab in Australia for desorption isotherms and other tests. Desorption isotherms will establish gas capacity of the coals. Medco has set temporary plugs in CBM-SE-02 and may reenter the well to conduct flow tests on individual seams of as part of its 2010 drilling program. This will be contingent on the results of CBM-SE-01 well which Medco has indicated it plans to drill before the end of this year. Medco, in consultation with CBM Asia, is currently reviewing its drilling, coring and sample collection/preservation procedures with a view to ensuring improved confidence in the results for CBM-SE-01 which is located approximately 18 kilometers to the south, offsetting an old oil and gas exploration well, the Kalidua 1. CBM Asia intends to participate in this well.
As part of the PSC application, in 2007 Medco, PT Ephindo and Institut Teknologi Bandung completed a Joint Evaluation Study of the Sekayu block to determine a plan to evaluate coal properties and commercial development. The Joint Evaluation Study, submitted to the Government of Indonesia and the basis for the commercial terms embodied in the May 27, 2008 award of the Sekayu PSC, provides an estimated Gas-in-Place of 3.35-4.68 Tcf for the 58,349 hectare Sekayu block1.
Under a revised letter of intent (the "Revised LOI") with, inter alia, Batavia Energy Inc. ("Batavia") CBM Asia has the right to acquire, indirectly, 24% of South Sumatra Energy Inc. ("SSE"), a private company jointly owned by PT Ephindo and Batavia, which, together with Medco, the operator, holds the PSC for coalbed methane on the Sekayu block. The Revised LOI also grants CBM Asia the sole and exclusive right to provide, financing for up to an additional 24% interest in SSE representing the remaining estimated 12% working interest in the Sekayu PSC. Closing of the Revised LOI has been extended to December 9, 2009 pending receipt of TSX Venture Exchange approval.(end of release)