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Posts tagged ‘CBM Asia Development Corp. (TCF)’

CBM Asia Chairman Scott Stevens on coalbed methane purchase and sale agreement

December 1st, 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 ResourceClips.com, “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.”

View Company Profile

Read more about CBM Asia

Contact:
Alan Charuk
President/CEO
604.684.2340

Disclaimer: CBM Asia Development Corp is a client of OnPage Media.

by Ted Niles

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 ResourceClips.com, “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.”

View Company Profile

Read more about CBM Asia

Contact:
Alan Charuk
President/CEO
604.684.2340

Disclaimer: CBM Asia Development Corp is a client of OnPage Media.

by Ted Niles

Fracking The Future

November 9th, 2011

CBM Asia Develops Indonesia Coalbed Methane

By Ted Niles

Indonesia’s abundant coal deposits have long been exploited, but it was Scott Stevens—in a 2004 paper published by the Society of Petroleum Engineers—who identified their coalbed methane potential. The Chairman of CBM Asia Development Corp TSX:TCF explains, “Indonesia is already the biggest exporter of coal in the world. The coal is beautiful quality; it’s very low in ash and really good for power generation. The industry is just booming.”

Stevens continues, “When these coals become deeper they become very gas charged; they pick up a lot of natural gas. We mapped that out, and we found that south Sumatra, east Kalimantan and south Kalimantan have really huge deposits. We estimate about 453 trillion cubic feet (TcF). That’s the number I developed 10 years ago, and the government still uses it.”

CBM Asia Develops Indonesia Coalbed Methane

Previously known as the stuff that, when detected, sends coal miners running for their lives, coalbed methane (or CBM) is an unconventional form of natural gas that is stored at high pressure in coal beds. Unconventional because of the process required to extract it (safely, that is), called hydraulic fracture or “fracking.” Hydraulic fracture, in the case of coalbed methane extraction, consists of drilling into the water-saturated rock to release the water and the gas. The gas rate increases the more water is extracted until the well reaches peak-gas production when, needless to say, it begins to decline. Estimates for average CBM well life range anywhere from 10 to 40 years.

Stevens’ discovery of Indonesia’s coalbed-methane potential came as welcome news to the country, whose increasing energy demands drove it, in 2008, from net-exporter of petroleum to net-importer, precipitating its withdrawal from OPEC. That same year the government introduced the Coalbed Methane Regulations giving CBM producers a considerable enticement by offering them a much larger share in production sharing contracts (PSCs) than their counterparts in oil and natural gas. The first such license was granted to CBM Asia in May 2008 for a 12% interest in the Sekayu PSC—located in the South Sumatra Basin—with an option to acquire an additional 12%. Included among those in possession of the 30 PSCs granted since then are multinational petroleum giants BP, Exxon Mobil and Total.

“We’re in this very interesting food chain here where they’re probably going to buy us out if we get to a certain point,” Stevens remarks. “And that’s a very valid strategy. I consult for the majors a lot around the world, and they know they’re not very good at discovery. In fact, they never discovered any of these CBM or shale plays. They only bought in after.”

CBM Asia announced its first NI 51-101 resource estimate for Sekayu PSC November 2. Gross prospective gas resources at the project have a low estimate of 319,051 MMcf (million cubic feet), a best estimate of 1,061,983 MMcf and a high estimate of 2,056,266 MMcf. Stevens comments, “There are a lot of tonnes there—millions and millions of tonnes—so that adds up to a lot of gas. We found 500 millidarcies of permeability, which is really good. And Medco [i.e. PT Medco Energi Internasional Tbk], the operator, also found they had gas flowing to the surface right away. So the indications look really good at Sekayu, and Medco is really excited as well. They’ve decided to fast track and move up the production pilot to probably 1Q 2012.”

According to the company, Sekayu’s geology is similar to that of Wyoming’s Powder River Basin (PRB), which currently produces 1.5 Bcfd of CPM and could produce as much as 30 Tcf.

The pilot will consist of a cluster of wells, spaced about 1,000 to 1,500 feet apart. Once running, the most likely method of transport for sale of the gas would be for project operator, Medco, to build a short pipeline to connect with the Trans Sumatra Gas Pipeline—located 10 kilometres from Sekayu—which is currently functioning at 65% capacity. “That pipeline goes up to Singapore, where it gets $12 gas,” Stevens reports. “Of course, we don’t get that $12, but we would very likely get much better than four dollars. That’s the near-term commercial plan. That would allow us to get proved reserves on a small portion of the block; it would give us more confidence that this is real; and it will give us a little cash flow to help get things going.”

We’re in this very interesting food chain here where they’re probably going to buy us out if we get to a certain point —Scott Stevens

He continues, “We’ll hopefully have four or five wells in a cluster sometime in 2Q and then put it on production. So maybe by mid-year we could be flaring enough gas to give [Medco] the encouragement to build that pipeline connector. That might be in 3Q 2012, and then we’ve got cash flow for that quarter.”

Moving forward, the objective is for the company to build multiple pilots on the 58,349-hectare property, and Stevens is hoping to be started on the next in the second half of 2012. In the event that CBM Asia has two pilots by the end of next year, they would undertake a reserve update. “The numbers will be much bigger and promising at that point,” Stevens says. “Solid, tighter numbers. It’s a gradual ramp up over time. At some point, let’s say, in early 2013, when we de-risk the project significantly, it’s possible that a company might want to buy us out.”

The company took a drubbing November 3 from 321 Gold’s Bob Moriarty over the apparent disparity between its market capitalization and the estimated value of its resource. To be sure, Stevens himself admits that he was expecting a stronger reaction from the market after the release of the NI 51-101. A 24% interest in Sekayu—which contains a best-estimate resource of over 1 trillion cubic feet, at a ball-park natural gas price of $0.50 per thousand cubic feet—has a present value of approximately $120 million. Which is more than seven times CBM Asia’s current market cap.

Stevens maintains, however, that this has less to do with the company than it does with the relative newness of the industry in Indonesia. “Things don’t move as fast in Indonesia as they do in North America at the moment because it’s a new industry. And the service sector is learning, and the government is learning, and everybody is really cautious. That’s been very frustrating for us. Companies like Core Laboratories and Weatherford International weren’t even set up in Indonesia until Exxon and BP got going. But it’s much better today.”

Long term, while Stevens doesn’t discount the possibility of full-scale production, he considers CBM Asia’s strengths to lie in exploration. He concludes, “We have a unique knowledge about the geology of Indonesia and CBMs specifically. I’ve been there for 15 years, and I first identified the potential. I’ve been involved with all the other projects as a consultant, and the government knows me well. If someone came along, and we had de-risked these projects, and they were willing to give us 10 times what we’d put in, we would say sure. Then we’d go out and do it again. If for some reason that doesn’t materialize, we’re certainly capable of developing the fields.”

CBM Asia currently has 70.6 million shares trading at $0.23 for a $16.3 million market cap. Its other projects in Indonesia include Kutai Basin, Kutai-West PSC and Kutai II. The company will be hosting a conference call and live webcast about the Sekayu resource estimate Thursday, November 10, at 9:00 AM PST.

Disclaimer: CBM Asia is a client of On Page Media.