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Far East Energy Announces Signing of Letter of Intent on Shouyang CBM Purchase and Sales and Increase in Gas Production From Distant Parameter Well
Far East Energy Announces Signing of Letter of Intent on Shouyang CBM Purchase and Sales and Incr...
About this update from Canada Rare Earth Corp.
[{"type":"text","content":"\n\n\n\nOct. 26, 2009 (Canada NewsWire Group) -- HOUSTON, Oct. 26 /CNW/ --Far East Energy Corporation (OTC Bulletin Board: FEEC) announced today that a Letter of Intent has been signed for the sale of gas produced from its Shouyang Project. This agreement was signed on October 16, 2009, by the Chinese partner of Far East, China United Coalbed Methane Co. Ltd. (CUCBM) and Shanxi International Energy Co. Ltd. Under the terms of the Production Sharing Contract covering the Shouyang Block, gas produced by Far East and its partner, CUCBM, is sold by CUCBM on behalf of Far East. Shanxi International Energy Co. Ltd intends to transport gas produced from the Far East Shouyang block through a pipeline that it will build directly to the area of Far East's current Shouyang gas production. It will then sell this gas to downstream users.\"This is excellent news,\" said Michael R. McElwrath, CEO and President of Far East, \"and it came quicker than we had hoped for. For quite some time we have had a three-phased gas sales strategy, planning to sell our first gas as compressed natural gas (CNG). Then, as gas volumes grew, we would also begin to sell gas into pipelines within Shanxi Province, and then ultimately, when volumes were too big to be absorbed by the CNG and provincial market, we would move gas into the large trunklines to Beijing and Shanghai. This clearly indicates our ability to sell into the provincial network and its early advent is a really pleasant development. We will also continue with our plans to sell a portion of our gas as CNG, and thus, two of the three phases will become realities.\"Far East also announced that it has seen a rapid rise in gas production from its P2 parameter well some 7 kilometers distant from its 1H Pilot Area in Shouyang. Previously, on September 8, Far East announced that the P2 parameter well, which was drilled to test the production characteristics and potential of an area approximately seven kilometers away from the 1H Pilot Area, had started producing gas from the #15 coal seam, the same seam that is highly permeable in the 1H Pilot Area and from which most of the current production is derived. Moreover, core from the #9 seam in the P2 parameter well had revealed very promising gas data. Over the past 48 hours production from the P2 has more than tripled, rising from 16 to 17 Mcf per day to betwe...