GEEC.L Regulatory News (GEEC)

18 Sep 2006 07:00

Great Eastern Energy Corp Ltd18 September 2006 Great Eastern Energy Corporation Ltd. (Great Eastern) is pleased to provide thefollowing project update prior to entering its close period. Great Eastern is exploring and developing production of coal bed methane (CBM)in the Raniganj coalfields, West Bengal. A first of its kind in India, theprocess turns an otherwise environmental hazard into a high potential energysource. In the first phase, the project plan involves the drilling of 100 wells over anestimated four year period. CBM wells are typically shallow wells and are assuch relatively quick and cheap to drill. The estimated gas in place in GreatEastern's block is 1.386 TCF and the total of proved, probable and possiblereserve is 817 BCF. First 20 Production Wells Program The Company has now successfully drilled 18 production wells and the 19th wellis in progress, out of the first phase of 20 wells. Drilling started in January 2006 and well completion activities commenced inJune. Completion activities involve preparing the wells for the required removalof water prior to gas production through perforation and hydro-fracturing.Hydro-fracturing has been completed in 10 wells and the Company expects thefirst 20 well phase to be completed by December 2006. The next stage, which is the de-watering of the wells, is also now progressing,with pumps currently installed in 3 wells. These production wells are in addition to the three pilot wells which havealready been drilled, cased, cemented, perforated & fractured and which arecurrently de-watering and producing some gas from one coal seam. Overall production is expected to increase once more wells start dewatering andinteraction amongst the wells increases. This is expected to take place by themiddle of next year when the Company anticipates having saleable production. Pipeline Network, Group Gathering Station The work on route survey, pipeline network and the Group Gathering Station (GGS)has also commenced. The survey and design work is nearing completion and thephysical work will start in December 2006. The Company has awarded a contract to MECON Limited, a leading engineeringconsultant, for providing project management and engineering services for thisscheme. MECON has considerable experience in this type of work and has executedsimilar projects for various oil and gas operators. The GGS is expected to beoperational by June 2007. Core Well Program In addition to the production wells, the Company has commenced its second CoreWell drilling program for data collection purposes. This second programcomprises 6 wells, 5 of which have been drilled and the 6th is in progress. The contract to drill the Core Well program has been awarded to MitchellDrilling, an Australian company with a significant amount of experience in theCBM area. The Central Mining Research Institute (CMRI) is conducting the gasdesorption studies at the site. Other studies such as proximate, ultimateanalysis and coal ranks etc. are also being carried out by CMRI. In addition,samples from the coring program have been sent for analysis to TerraTek Inc., aleading laboratory in the US. The data collation and the results thereof are expected to be available byDecember 2006. Field Development Plan Great Eastern has prepared a Field Development Plan, which comprises 100 wells.As expected at the time of the Company's results in May, this plan has now beensubmitted to the Directorate of Hydrocarbons for approval. Next 20 Well Program The Company has circulated its global tender for the next production wellprogram, comprising 20 wells. Bids have been received and are currently beingevaluated for the following activities: • Drilling • Wireline logging & Perforation • Cementing & Hydro-fracturing Notes to Editors: Great Eastern Energy Corporation Ltd ("Great Eastern") is a public limitedcompany incorporated in India in 1992 to explore, develop, distribute and marketCoal Bed Methane (CBM) in India. Great Eastern, which is headed by Mr. Y.K. Modi, is exploring & developingproduction wells for Coal Bed Methane in the Raniganj coalfields, West Bengal. Apioneering initiative and a first-of-its-kind in India, the process would leadto demethanation of coal beds and the avoidance of harmful methane emissionsinto the atmosphere - thus turning an otherwise environmental hazard into ahigh-potential energy resource. The Company has a licence to explore for Coal Bed Methane in the 210 sq km block(approximately 52,000 acres) in the Raniganj Coalfields of the Damodar Valley,near Asansol, West Bengal. It is located approximately 200 km north-west ofKolkata and is connected by a national highway & mainline railways. The estimated gas in place in the block, as per Schlumberger's 2005 report, is1.386 TCF and the total of proved, probable and possible reserve is 817 BCF. The Company commenced commercial drilling of CBM wells on 14th January 2006 andhas outsourced the entire activity of commercial drilling, wire line logging &perforation services, cementing & fracturing operations of its commercial CBMwells to three leading companies namely Mitchell Drilling International Pty Ltd.(Australia), HLS Asia Limited (a collaboration company of Halliburton EnergyServices Inc., USA), and BJ Services Company Middle East Limited (a subsidiaryof BJ Services Company, USA), who have vast experience in CBM projects andtechnology. Great Eastern is the first Indian company to commence commercial drilling of CBMwells in India. The project plan involves drilling of 100 wells over anestimated four year period in the first phase at an estimated capital outlay of$125 million. The Company may drill more wells (possibly another 200) in thenext phases to extract further CBM reserves in the block as estimated bySchlumberger. End: September 18, 2006 This information is provided by RNS The company news service from the London Stock Exchange