AAG nodded for 2nd CBM project

AAG Energy Ltd, an independent coal-bed methane company in China, announced on Tuesday that the development plan for its Mabi CBM Project in Shanxiprovince, obtained preliminary approval from the National Energy Administration.

The commercial capacity of the first phase of the project is expected to reach about 1 billion cubic meters a year, with a potential annual commercial production of more than 3 billion cubic meters.

Mabi CBM project is a Sino-foreign cooperative project jointly developed by China National Petroleum Corp and AAG's wholly-owned subsidiary Asian American Gas Inc, with AAGI as the operator.

NEA's preliminary approval allows AAGI to start commercial development preparations and begin the process of obtaining government approvals necessary for full-scale commercial development.

The Mabi CBM block has audited net proven reserves of approximately 56.6 billion cubic meters.

It is one of two CBM blocks that AAG has been exploring and developing in the Qinshui Basin in Shanxi province, China's most commercially-advanced CBM basin.

Panzhuang CBM block, another block developed by AAG, achieved formal preliminary approval in 2011 and its production is expected to be more than 140 million cubic meters in 2013, according to the company.

"The Mabi preliminary approval marks another important milestone for our unconventional gas development in China and further demonstrates our continued strong working relationship with our Chinese partners," said Steve Zou, chairman of AAG.

According to China's 12th Five-Year Plan (2011-15) for the coal-bed methane industry, the country will reach an annual production of 16 billion cubic meters and a proven reserve of 1 trillion cubic meters by 2015.

The country is working on accelerating coal-bed methane as an important supplement for natural gas resources, aiming at improving the country's energy consumption structure for cleaner development.