Far East Energy continues to increase gas production in China block

Far East Energy Corporation has announced that gas production from its Shouyang Block in Shanxi Province, China, continues to increase steadily and has achieved another milestone, now surpassing 400,000 cf, or 400 mm cfpd.
The rate of increase in produced gas volumes is becoming more pronounced as critical desorption pressure is reached across an expanding area.

"This is precisely what we want to see, and exactly what we were expecting," said Garry Ward, Senior Vice President of Engineering.
"Once you have enough wells drilled to properly dewater a high perm area, you expect to see more and more wells ramping up in gas production and new wells coming on line with gas as the dewatering lowers pressure and allows more and more gas to desorb off the coal. We are now preparing to extend our development to the west, utilizing five drilling rigs. We expect the existing wells to continue their increases as we accelerate the dewatering of this area and expand the development."

Earlier, Far East signed contracts with Beijing China Coal Dadi Technology Development Company to provide four drilling rigs, and with Henan Yu Zhong Geology Exploration Engineering Company to provide one rig to significantly ramp up the drilling program in Shouyang.
Far East plans to drill and fracture (frac) nine new wells before the Chinese New Year, which will occur in mid-February 2010, and also to frac its existing P4 parameter well. Eight of the new wells will continue the westward expansion of the high permeability field, and one will be a new parameter well drilled several kilometres to the west to continue to delineate the geographic extent of the high permeability/high gas content area.

Additionally, Far East announced that Shanxi CBM and Natural Gas Gathering and Transmission Company (Shanxi Gathering) has made a request to enter into negotiations with China United Coalbed Methane (CUCBM) and Far East for the purchase of Far East's Shouyang gas production.
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 Gathering is commissioned to build a pipeline that currently is planned to be routed through the Far East field, or just to the south of it, with construction scheduled to begin early in 2010 and with completion expected by July 2010. Shanxi Gathering has indicated its intent to accept the gas produced by Far East regardless of volume.
Previously, on October 26, 2009, Far East announced that a Letter of Intent had been signed for the sale of gas produced from its Shouyang Project; with the gas to be transported via a pipeline to be built by Shanxi International Energy to the area of Far East's current Shouyang gas production. There are now two pipelines and one local distribution/compressed natural gas company that have indicated a desire to purchase the gas produced from the Shouyang Block.

Far East Energy Corporation is focused on CBM exploration and development in China.