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Chinese coal seam gas field on route to commercialisation

LNG Industry,

Dart energy has announced that it is carrying out early commercialisation work on its Liuling coal seam gas project in China and expects to start initial gas sales in the first half of 2013.

The company is currently working to bring two wells drilled this year into production, bringing the total number of production wells up to five. These are expected to provide enough gas to meet the requirements of an existing gas sales agreement with Shaanxi-CUCBM for up to 1.75 million ft3 per day.

Dart currently produces 500 000 ft3 of gas per day from the first three multilateral horizontal wells at the project. This production rate is increasing on a daily basis as dewatering and bottom hole pressure reduction continues.

Liulin development and gas sales

Initial gas sales from Liulin will be carried out through a compressed natural gas plant that is currently under construction and expected to be ready for commissioning in the second half of 2012.

The plant is owned and operated by Shaanxi-CUCBM while gas sold is expected to yield about US$ 7.10 per thousand ft3, or about US$ 4.1 million per annum in potential revenue net to Fortune Liulin Gas, in which Dart has a 50% stake.

Dart has already completed engineering design of a field gathering system and has an engineering procurement construction contract in place. Construction of the gathering system and associated equipment is expected to take between six to nine months and will commence immediately upon receipt of relevant approvals.

Meanwhile, the company is preparing a full field overall development plant for submission before the end of this year.  This covers all of the technical work, engineering designs and environmental studies required to allow for full scale development of the field, bringing about a major increase in gas sales.

China gas demand

Chinese gas demand is expected to double over the next five years, fuelling a large part of the expected 17% increase in global demand over the same time frame. The International Energy Agency has predicted that China will emerge as the third largest gas user by 2013.

The country is expected to meet this demand through an increase in gas imports including liquefied natural gas as well as increasing domestic production, which state owned CNPC believes could hit 200 billion m3 by 2020.

Much of this is expected to be met by unconventional sources such as coal seam gas and shale gas.




Adapted from a press release by David Bizley

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