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Message: Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zo

Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zo

posted on Jul 09, 2009 06:19AM

PETROMIN RESOURCES LTD.

 

Attention Business Editors

Project Update & Confirmation of Extensive Thickness of Prospective Shale Gas Zone

TSX-V: PTR

VANCOUVER, July 8 /CNW/ - Petromin Resources Ltd. is pleased to announce

that Terrawest Energy Corp. (TWE) has indicated that according to data from

the field uncovered by Norwest Corporation at the completion of the geological

survey and dated June 21, 2009 -, the thickness of the prospective Jurassic

Badaowan ("J1B") formation on TWE Liuhuanggou Project lands is far greater

than initially indicated by drilling. The Liuhuanggou Project is located in

the southern Junggar Basin of Xinjiang, China.

As disclosed previously, the discovery well LHG 08-03 intersected

approximately 350 meters (1,155 feet) of J1B formation prior to reaching total

depth in late 2008. The 350 meters intersection included approximately 170

meters (560 feet) of gas-bearing shale. Well LHG 08-03 also intersected 52.3m

of the previously known Jurassic Xishanyao J2X coalbed methane target coal

seam.

The 2009 geological work began in late May 2009 and has included

surveying and mapping of extensive J1B outcrops, shale and coal seam exposures

and small-scale surface coal mining sites. The coal seams are excellent

geological markers for the J1B and provide references in calculating formation

thickness. Geologists were able to survey and map outcrops over distances of

1.25 to 2.5 kilometers (0.75 to 1.5 miles) across the northeasterly striking

formation. Taking the dip of the formation into account a true formation

thickness of at least 750 meters (2,475 feet) can be calculated.

The geologic survey of surface outcrops of the J1B and small mining

locations indicate the formation contains prospective shale intervals of

indeterminate thickness interbedded with multiple coal seams of up to 6.0

meters (19.8 feet) thickness across the entire survey area.

The Board considers that the confirmation of greater thicknesses of

prospective shale as well as multiple interbedded CBM zones provides

confidence that TWE has potentially encountered a natural gas accumulation of

great merit and importance to China. The next steps of the Liuhuanggou Project

will be to further sample, test and analyze the shale and the other formation

intervals, delineate the scale of the resource and determine critical

reservoir characteristics.

Samples of shale taken from 2008 drilling are currently being analyzed.

Additional test drilling at selected locations is expected to begin in late

July or August 2009.

The geological team for the TWE Liuhuanggou Project is headed by Dr.

Yulin Li, senior resource scientist for Norwest Corporation. Dr. Li is a

respected China coal expert who was the chairman of Xian Branch China Coal

Research Institute. In Canada, Dr. Li has been involved with other Norwest

professionals in various unconventional natural gas exploration projects in

Alberta and British Columbia, Canada.

As previously disclosed, the Liuhuanggou Project has a significant

infrastructure advantage in China. The Junggar Basin in Xinjiang is an active

hydrocarbon region with existing petroleum and natural gas production and

extensive gas infrastructure. At present natural gas pipelines owned and

operated by PetroChina Company Ltd. transport gas from producing fields to

Urumqi city, a growing local gas market. Another pipeline connects Urumqi to

the west-east pipeline, which can transport gas across China to Shanghai and

other population centers. A second west-east pipeline to carry imported and

eventually, domestic natural gas across China to Guangzhou in the southern

province of Guangdong is under construction and crosses the Liuhuanggou

Project lands.

Shale gas exploration and development in North America has blossomed to

become the hottest hydrocarbon play on the continent. Several shale gas basins

including the Barnett, Woodford, Haynesville, Fayetteville and Marcellus have

become large-scale producers with huge reserve bases in North America. Shale

gas production in the US has risen rapidly in recent years as production

technology evolved, reaching approximately 5Bcf/day in 2008 according to the

US Department of Energy.

The apparent thickness of the prospective J1B formation in outcrops and

the drilling intersection in Well LHG 08-03 compare favorably with known

producing shale gas basins. A comparison is set out below:

<<

Location Formation Average Thickness

British Columbia Doig, Doig Phosphate, 300-500 meter*

Montney

United States Barnett Shale 100 meters*

United States Marcellus Shale 15-75 metres(xx)

Junggar Basin, China Badaowan J1B 750 meters(xxx)

* Data is obtained from "An Overview of Shale Gas Potential in

Northeastern British Columbia", Levson, V. M., Walsh, W., Adams, C.,

Ferri, F., Hayes, M., Canadian Society of Petroleum Geologists, 2009

(CSPG)

(xx) Data obtained from Talisman Energy 2008.

(xxx)Information obtained from Barnett Shale Energy Education Council

2009 based on 1.4 trillion cubic feet annual total production

in 2008.

- This is the indicated true thickness from geological survey of

surface outcrops conducted by Norwest.

- Other than the data with regards to the Badowan J1B formation, the

sources of the data in the above table are independent of Petromin.

The information obtained from the Canadian Society of Petroleum

Geologists and the Barnett Shale Energy Council was prepared by

industry groups.

>>

Estimates of shale gas reserves and resources are such that industry

leaders believe there is sufficient natural gas in North America to support

expanded production and greater utilization in electricity generation and

automobile transport.

The expansion of the utilization of gas in North America will have a

beneficial impact on the environment by lowering greenhouse gas emissions if

natural gas use replaces coal and petroleum. The double-edged benefit of

increased energy security and improved environmental impact is being widely

promoted by industry and well received by governments internationally. The

international implications of the expansion of shale gas reserves and

production are reflected in the reported meetings of industry leaders with the

Energy Secretary of the US in Washington, DC and G8 energy ministers in Rome

in May 2009.

TWE holds a 47% interest in the Liuhuanggou Production Sharing Contract

(PSC) with China United Coalbed Methane Corp Ltd. (CUCBM) holding the

remaining 53%. The PSC was executed on 30 December 2005, came into force on 1

March 2006 after receiving China Ministry of Commerce approval and has a

nominal five-year exploration period and a total thirty-year term. TWE is the

operator of the Liuhuanggou Project and has the right to explore for, develop

produce and sell all natural gas stored in various Jurassic Age geologic

formations to a depth of 1,500 meters.

About Petromin Resources Ltd.

Petromin Resources is a progressive international petroleum and natural

gas exploration and production company listed Tier 1 on the TSX Venture

Exchange. Petromin is a major shareholder in TWE and provides professional

services under the terms of a management agreement with TWE.

Forward Looking Statements:

Statements contained in this news release that are not historical facts

are forward-looking statements that involve various risks and uncertainty

affecting the business of Petromin Resources. Actual results may vary

materially from the information provided in this release.

As a result there is no representation by Petromin Resources that the

actual results realized in the future will be the same in whole or in part as

those presented herein. Actual results may differ materially from the results

predicted, and reported results should not be considered as an indication of

future performance. Factors that could cause actual results to differ from

those contained in the forward-looking statements, are set forth in, but are

not limited to, filings that the Company and its independent evaluator have

made, including the Company's most recent reports in Canada under National

Instrument 51-102.

<<

Neither TSX Venture Exchange nor its Regulation Services Provider (as

that term is defined in the policies of the TSX Venture Exchange) accepts

responsibility for the adequacy or accuracy of this release.

On behalf of the Board of Directors,

A. Ross Gorrell

>>

-30-

/For further information: Mike Suk, VP Corporate Affairs, (604) 682-8831,

Website:

www.petromin.ca/

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