Production & exploration blocks

Green Dragon Gas’ assets consist of seven blocks across six Inland Production Sharing Contracts covering 7,566 km2, the largest publicly listed CBM reserves base in China.

Shizhuang South Block (GSS)

Location: covers an area of 375 km2 in the south eastern part of the Qinshui basin, in the Shanxi Province, 60 km from the dedicated Duanshi-Boai gas pipeline

Status: the Group’s most advanced Block, with exploration by CUCBM commencing in 1997, and commercial production in October 2008

Geology: The block is part of the wider, 30,000 km2 Qinshui basin, a large-scale CBM area which features coal formations at average depths ranging from 636m to 640m approximately. There are two major coal seams present throughout the GSS as well as the GCZ blocks, Coal Seams 3 and 15.

Operator: GDG and CUCBM

Ownership: GDG 60% (to be increased to 70% on option exercise); 40% CUCBM

Drilling: 1,491wells drilled to date: 68 exploration, 874 online, 544 gas producing

Investment: US$518m of capital has been deployed by CNOOC (CUCBM) to date, with additional spending towards offtake infrastructure; 329km of seismic

Route to market: gas is carried to the market using CNG transport trucks and the West-East Pipeline

Chengzhuang Block (GCZ)

Location: covers an area of 67 km2 adjacent to the GSS block in the south eastern part of the Qinshui basin, in the Shanxi Province

Status: one of GDG’s key areas of production and focus, part of the Shizhuang South PSC together with GSS

Geology: Also part of the Qinshui basin, Coal Seams 3 and 15 are also present at the asset.

Operator: CNPC; in addition, CUCBM would be solely responsible for developing and operating coal
Seam number 3

Ownership: 47% GDG, 53% CNPC

Drilling: 104 wells producing 4.16Bcf pa

Route to market: The gas is carried to market using the West-East Pipeline.

Shizhuang North Block (GSN)

Location: The 375km2 Shizhuang North Block lies on the eastern part of the Qinshui basin, in close proximity to the GSS Block.

Status: At an exploration stage; with Group as well as CUCBM investment ongoing. The continuation of Coal Seams 3 and 15 and its proximity to the GSS Block make GSN an extension of its more advanced neighbouring block. 10% of GDG’s participating interest was sold to CUCBM for US$200m carry, reflecting the potential of the block.

Geology: The structure of the block is similar to Shizhuang, with CBM in coal formations at depths of 914m to 1,006m, and overall seam thickness averages approximately five meters. Coal Seams 3 and 15 continue from the Shizhuang South Block north into the Shizhuang North Block.

Operator: CUCBM

Ownership: 50% GDG, 50% CUCBM

Drilling: 201 wells drilled to date by GDG and CUCBM, of which 106 are exploration, 27 are online, and 3 are gas producing.

Investment: US$100m invested by CUCBM, with an additional US$100m commitment in development capital; 227 km of seismic have been completed at the block to date.

Route to Market: The West-East and theYulin-Jinan pipelines are in in close proximity to the Block, which is also strategically located for potential gas markets in Zhengzhou and Henan provinces. The former alone has more than 30 CNG stations, with further demand from industrial bases in Taiyuan, Linfen and Changzhi.

Qinyuan Block (GQY)

Location: The 3,665 km2 Qinyuan Block consists of contracted area and is located 185 km from Taiyuan in Shanxi province and roughly 30 km northwest of the Shizhuang North Block.

Status: The block is sub-divided in two equal areas, A and B, with with each operator responsible for all exploration expenditure for their area. Given its rich resources, the Qinyuan Block will be one of the Group’s key long-term areas of focus.

Geology: Positioned on the western edge of the Qinshui Basin, the 3,665 km2 Qinyuan Block is considerably larger than the Group’s other blocks. . Coal seams 3, 15 and 16 outcrop on the western edge of the Block, and are the primary targets for CBM exploration and development.

Operator:

  • Area A: CUCBM
  • Area B: GDG

Ownership:

  • Area A: 90% CUCBM, 10% GDG
  • Area B: GDG 60%, CUCBM 40%

Drilling:

  • Area A: 5 exploration wells
  • Area B: 17 exploration wells, with 4 online

Investment: 634km of seismic have been completed at the asset to date, with investment in exploration by both GDG and CUCBM.

Route to Market: The Qinyuan Block has the same potential options for gas commercialisation as the Shizhuang South Block, with additional access to the East-West pipeline via a connection 50 km from the block, and on-site access to trunk-line well-side gathering stations.

Fengcheng Block (GFC)

Location: The block consists of 1,541 km2 of contracted area, intersecting several active coal mining operations 74 km from Nanchang, the in Jiangxi province.

Status: The Fengcheng Block is the Group’s second most advanced Block, having responded extremely positively to horizontal drilling and further development expected using LiFaBriC technology.

Geology: CBM in this area is in coal formations at average depths from 716m to 882m, and approximately 3.5m in thickness, with Coal Seams B and C the two main coal packages present in the Pingle Depression located in the Fengcheng Block.

Operator: GDG

Ownership: 49% GDG, 51% CUCBM

Drilling: a total of 66 wells have been drilled across GFC and GPS blocks by GDG and CUCBM

Investment: Investment by the Group and CUCBM in exploration and development, including conducting four gas desorption tests to determine the gas content of the coal and to define the CBM reserves and resources. CUCBM has drilled 4 production wells, which are subject to the Framework agreement between the companies.

Route to Market: The Block is strategically located close to the West-East Pipeline II, and in close proximity to industrial zones, including Nanchang, Xinyu and Fuzhou. There is also a proposal to construct a natural gas power plant and CNG station in Nanchang, 20km away.

Panxie East Block (GPX)

Location: The Panxie East Block is a 584 km2 contracted area located approximately 90 km from Hefei, in the Anhui province.

Status: The block is at an early exploration stage, with ongoing investment from the Group and its partner, CUCBM.

Geology: Located within the Huainan Basin, Panxie East contains three coal seams suitable for CBM exploration and production, 13-1, 11-2, and 8, at average depths ranging from 1,336 m to 1,446 m.

Operator: GDG

Ownership: 60% GDG, 40% CUCBM

Drilling: a total of 66 wells have been drilled across GFC and GPS blocks by GDG and CUCBM

Investment: GDG is progressing with exploration drilling at the block, as well as the collection of extensive data from the local coalmine bureau, with production drilling and dewatering also in progress from CUCBM.

Route to Market: The Panxie East Block has the benefit of being close to the West-East Pipeline I, which would enable gas to be transported downstream to provinces and cities such as Jiangsu, Zhejiang and Shanghai. The Block is also located in close proximity to potential gas markets in Nanjing and Taizhou.

Baotian-Qingshan Block (‘‘GGZ’’)

Location: The 947 km2 Baotian-Qingshan Block is located 316 km from Guiyang, in the Guizhou province.

Status: The Block is at a preliminary exploration stage. Data from approximately 400 coal exploration core holes acquired from the Geological Bureau of Guizhou Province, as well as seismic information are being used alongside exploration drilling and gas desorption tests to determine the gas content.

Geology: The Block is located in the Qingshan Syncline, with Coal Seams 17, 19 and 29, CBM in this area at depths of 636m-731m.

Operator: GDG

Ownership: GDG 60%, CNPC 40%

Drilling: Data from approximately 400 coal exploration core holes acquired from the Geological Bureau of Guizhou Province, as well as seismic information are being used alongside exploration drilling and gas desorption tests to determine the gas content.

Investment: Exploration at the block is at its preliminary stage, with investment to date of US$23.4m, including drilling.

Route to Market: The Block is closely located to Sino-Burmese Pipeline, and has the potential to connect to West-East Pipeline II, which is under construction. The Group expects significant gas demand in Kunming.