These two agreements are the culmination of many months of geological review work and discussions with the mining groups and government organisations, according to Arrow.
“Based upon geological data reviewed, Arrow estimates Gas in Place in these two areas could be up to 4 trillion cubic feet,” the company said.
The first of these agreements is a heads of agreement with Bin County Coal. Under this deal, Arrow is to provide a degassing service ahead of mining operations in a similar model to Arrow’s current Moranbah North mine degassing project in Queensland, Australia in conjunction with the mine owner, Anglo Coal.
The Bin County mining lease covers about 100 square kilometres of Jurassic age coal with apparent good permeability and mid level-gas saturations. Arrow will now continue its technical studies and draw up plans for a pilot production program followed by the field’s development if the pilot is successful.
The second of the agreements is a memorandum of understanding with Shaanxi Binchang Mining Company to initially evaluate the potential for CSM developments on their mining tenements and following a successful evaluation to form a joint venture arrangement.
These areas, covering about 700sq.km, are adjacent to the fields covered by the Bin County and host coals with similar features.
“In its review of China’s coal basins, Arrow is seeking to leverage its existing skills and knowledge base by specifically targeting coal basins geologically similar to the Surat and Bowen Basins which host Arrow’s Australian gas fields,” CSM producer said.
“The company believes the Bin County and Binchang coal mines exhibit these similarities.”
With these two agreements Arrow will have access to most of the Binchang Coalfield. The nearby cities of Xi’an and Xianyang have combined populations of over 5 million people and both cities have established city gas businesses.
These agreements come on the heels of deals earlier this week with PetroChina, as well one in March, also covering Chinese blocks, signed with US player Orion.