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CBM Asia signs Agreement to sell Indonesia Coalbed Methane Gas

November 29th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningCBM Asia Development Corp TSXV:TCF announced that project operator, Medco Energi Internasional Tbk, has signed an agreement with Indonesia’s upstream oil and gas regulator, BPMigas, to conduct the sale and purchase of coalbed methane gas produced during dewatering at the Sekayu PSC (production sharing contract) in Indonesia. CBM Asia has a 12% interest in the Sekayu PSC with an option to acquire another 12%.

CBM Asia Chairman Scott Stevens tells, “The negotiation was between Medco, as the operator, and BPMigas—which is the government. We’re happy with the agreement. It shows that the government is really motivated to get early production and remove any possible roadblocks.

“The government has really been bending over backwards to try to accelerate commercial production from coalbed methane. It can be a slow process, but with coalbed methane the Indonesian government recognizes it’s different. You can get quick commercial production from a pilot. With coalbed methane you typically do the core holes—like we just did—and next you move into the pilot-production phase. Typically, that gas gets flared or vented. In this case, we have an option to work with GE which manufactures portable 3-megawatt [gensets]. They would provide that onsite, and then we would sell gas to the engine, and that would be linked into the grid. So there could be power development as early as 3Q 2012.

The [Indonesian] government has really been bending over backwards to try to accelerate commercial production from coalbed methane—Scott Stevens

“We’re designing the [pilot] wells right now with Medco,” Stevens continues. “In 1Q 2012 they drill them, and then they put them on production. Typically, there’s a few months of water production and low gas production. We’re hoping it’ll be pretty quick. That’s the main goal for that block. It’s the furthest along towards commercialization.

“The other block is in Kutai West. It is quite close to the Bontang LNG plant, and right next to BP—which is already commercial. We are supposed to be spudding the first core hole at Kutai West next month. That’ll give us the gas content, then we can get the NI 51-101 resource study sometime next year. We’re still in the early phases of working out a seismic- and core-hole drilling program at the two blocks that we have the 70% working interest and operatorship of. That’ll happen next year.”

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