Date: 18 May 2012 13:41 CST

– Greka expects drilling partnerships with Chinese firms this year

– Green Dragon plans doubling retail CBM fueling stations to 12 in 2012

By Wayne Ma Of DOW JONES NEWSWIRES

BEIJING (Dow Jones)–Greka Drilling Ltd. (GDL.LN), which offers drilling services to coal bed methane gas producers in China, plans to announce partnerships with state-owned oil and gas companies this year after expanding its fleet of drilling rigs to 32, Chairman and Chief Executive Randeep Grewal said.

“[We are] in dialogues with pretty much anyone you can think of with unconventional gas acreage,” Grewal told Dow Jones Newswires Wednesday. “You will see Greka make commitments to other parties to drill for them this year.”

China says it has vast recoverable resources of CBM–about 10.9 trillion cubic meters–but it is far from meeting ambitious CBM output goals due to complex geology, high distribution costs and unattractive joint-venture terms.

It has a target of 16 billion cubic meters of CBM output a year by 2015, but produced just 2.3 billion cubic meters last year, a tiny share of national gas use. China’s apparent consumption of natural gas rose 20.6% to 129 billion cubic meters in 2011, according to China National Petroleum Corp.

Last year, Greka spun off from independent CBM producer Green Dragon Gas Ltd.  (GDG.LN), which originally developed its drilling technology while working on the Shizhuang South block in Henan province.

Green Dragon is focused on selling CBM to local customers and plans to double its compressed natural gas, or CNG, retail stations to 12 by year-end, according to Grewal, who holds the same positions at both companies.

Green Dragon plans to spend 20% of a $250 million capital expenditure program on building midstream gas processing plants and downstream CNG retail stations over the next few years, he said.

Rather than rely on existing pipelines operated by Chinese companies, who are unwilling to pay for unconventional gas at market prices, Green Dragon plans to build a total of 25 CNG retail stations to serve local customers, he said.

While Green Dragon has production-sharing contracts in six Chinese CBM blocks, only its Shizhuang South block is producing commercially. The others should begin commercial production within the next two or three years, he said.

Shizhuang South produced about 1.5 billion cubic feet of CBM in 2011 and is on track for at least 1.7 billion cubic feet this year.

Once Green Dragon’s capital expenditure program is completed, hopefully by end-2013, it plans to ramp up output to 18 billion cubic feet, or 500 million cubic meters, annually, Grewal said.

Although Chinese and foreign companies have been more vocal about developing shale gas, Grewal said the two are complementary and differ only on risk appetite.

“Investors that are sprinters will try to migrate toward shale, but the risks are higher [due to immature technology],” he said. “Coal bed methane is more stable and consistent, but a longer-term reward.”

1.   Jincheng News: Greka will invest 6 billion RMB on CBM development

http://www.jcnews.com.cn/news/news_content/2012-05/09/content_167285.htm

http://www.sx.xinhuanet.com/dfzx/2012-04/26/content_25135905.htm

Mr. Grewal on the interview

(Repoter: Niu Qianjin) Greka will invest 6 billion RMB to Jincheng on CBM development and utilization during “12^th Five-Year”.

Greka is a British-funded enterprise, which owns business in oil, gas, mining, etc.in USA, India, Italy, etc., Greka Technical Services, a subsidiary of Greka Group entered Jincheng in October 2003. Greka has introduced 25 advanced drilling
rigs to explore and develop CBM of Zhizhuang South block of Qinshui County.

Mr. Grewal, president and CEO of Greka Group said that, Greka has developed new technology, which is suitable for Chinese geology, and can protect water and land resources. Greka Group 6 billion RMB to Jincheng on CBM development and utilization, and accelerate steps of “gasification of Jincheng”.

Shizhuang, Shanxi province in China – In silence, the pumpjacks of Green Dragon Gas bob up and down rhythmically as workers stand around them, checking on the pressure and making fine adjustments whenever needed. To a stray passerby, it’s just another day in the mining heartland of China, but beneath the earth, these wells are drilling for one of the most potent energy sources available to China–and they’re about to hit the proverbial gold mine.

In the March quarter, Green Dragon Gas publicized its increase in production: an incredible 34% increase at 414 million cubic feet. Even more incredible is the fact that this increase came from a single production block: the Shizhuang South block—the site where LiFaBriC technology has been applied en masse to combat the unique geological structure of the Chinese coal bed. With this massive rise in production by the March quarter, it would appear that Green Dragon Gas is well on its way of fulfilling its target goal of 18 billion cubic feet of gas, especially once the other four production blocks follow suit and as an additional 125 wells are completed throughout 2012.

The planned production of 18  billion cubic feet of gas is an ambitious yet feasible goal set by Green Dragon Gas. The company closed 2011 with proved reserves of Gas In Place of 25.5 TCF – a bonanza worth 263 million USD. In April 2012, Green Dragon Gas announced that exploration this year has yielded sufficient results to enable another block to move into the production phase.

The company estimates that the proved and probable (2P) reserve will increase to 307 billion cubic feet. The company also reported that there was a 2% rise in 3P reserves to a total of 2513 billion cubic feet of mined gas.

With eyes on the vertical integration of coalbed methane (CBM), Green Dragon Gas is also focusing on compressed natural gas (CNG) distribution stations in Henan and Shanxi while simultaneously developing distribution channels in both pipelines and power. With CBM reserves in China estimated to be able to fulfill 15% of China’s natural gas needs, Green Dragon Gas—with its advanced technologies—stands to gain a sizeable portion of this massive energy source.

Meanwhile, the pumpjacks of the Green Dragon Gas wells continue to bob up and down in silence at Shizhuangg, shanxi province continues to increase production rate.

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Wed, May 9, 2012 11:25 am by Sergei Balashov

Source:  http://www.proactiveinvestors.co.uk/companies/news/42541/green-dragon-gas-production-jumps-34pct-on-track-for-18bcf-target-42541.html

Green Dragon Gas (LON:GDG) remains on track to hit its ambitious anualised production rate target after seeing its gas output jump 34 percent to 414 million cubic feet in the March quarter.

The China focused coal bed methane (CBM) gas producer said the entire production came from the Shizhuang South block, where Greka Drilling’s LiFaBriC methodology applied to lined, faulted brittle coals continues to increase production rates.

The group has set a production rate target of 18 billion cubic feet of gas compared with the 1.5 bcf produced in 2011, which was a 150 percent increase over 2010.

As production rose, turnover increased to US$75.2 million in 2011 from US$49.7 million in 2the previous year.

The group drilled 67 wells during the year and closed 2011 with proved reserves up by five percent at 43 bcf, worth US$263 million.

Proved and probable (2P) reserve estimate by 18 percent to 307 bcf and there was a two percent rise in 3P reserves to 2,513 bcf of gas.

Exploration this year should yield sufficient results to enable another block to move into the production phase, Green Dragon said in its final results report in April.

The downstream gas retail business’ focus is now on compressed natural gas CNG distribution stations in Henan and Shanxi provinces in China, while the mid-stream business is developing CNG distribution channels in pipelines and power.

Shanxi, China – standing amidst the barren plains of central China, the olive green and gold colored pumps chug slowly as workers mill about, making necessary adjustments wherever required. While appearing similar to a petroleum pumpjack, these pumps are diving into the earth for a far cleaner and far more lucrative source of energy:

Coalbed Methane

These pumps are run by Greka, one of the original foreign signatories to the Production Sharing Contract signed in the 90s  with the Central Government at the Great Wall.  Under the direction of CEO Randeep Grewal, Greka is on track to become a major supplier of gas to the Chinese economy.

China has already expressed strong desires to capture and utilize natural gas in an attempt to relieve itself of the burden of importing gas from central Asia. In fact, in certain areas such as Henan, natural gas is the only accepted source of fuel for the cars on the road with coalbed methane being one of the leading forms. The use of natural gas in China has skyrocketed at a rate of 20% annual increase.

When asked, the gas station attendants said that:

“Firstly, it’s much cheaper to use gas, and also, to pump natural gas compared to gasoline is easier for us.”

In fact, the demand has far outstripped supply for now. With China sitting on the 3^rd largest estimated coalbed methane sources in the world, Greka advancement in acquisition will play an ever-expanding role in the future of Chinese energy. With the scheduled introduction of 25 new stations, Greka  is poised to become the answer to China’s seemingly insatiable demand for natural gas.

May 3 2012 Financial Times

Please click this link for the video:  http://video.ft.com/v/1618353589001/Alternative-energy-in-China

Shale gas has provided the US with abundant cheap energy, China is looking to its own alternative gas resources to do the same. The FT’s Leslie Hook visits Shanxi province to see how the country is exploiting its coal bed methane resources.

According to the Xinhua News Agency, Greka Drilling CEO Randeep Grewal has proclaimed that by the end of 2012, the construction of 25 CBM drilling stations in northern Hunan will be completed. A rough estimate of the gas supplying potential of these 25 stations is at 500,000 cubic meters of CBM daily. This translates to little over 150 millions cubic meters of CBM supplied yearly to the region.

The 2011-2015 Five Year Plan of the Chinese Central government state that China is proposing to increase its CBM output to 30 billion cubic meters per annum. Greka Drilling’s rapid expansion in this field will prove instrumental for China’s ambitious strides forward towards this green source of energy.

Greka’s History in China

Greka Drilling has been in China since 1997 and is the only one of the original 5 foreign companies that signed the Production Sharing Contract with the Chinese Central Government at the Great Wall still working day-in and day-out on the ground with appropriate technology.

In 2008, Greka Drilling made a breakthrough with its advanced LiFaBriC technology, enabling it to tap into China’s vast CBM resources without encountering problems with the rough terrain ill-suited for western CBM drilling techniques.

Early in 2012, Greka planned on an expansion of 25 new drilling stations within southern China that will satisfy the growing needs of the local infrastructure. Now, with the drilling stations becoming solid reality, it appears that Greka Drilling is right on target to its goals.

On the 19^th of April, 2012, Jincheng  City Mobilization Defense Committee held a ceremony to recognise Greka’s services to the local community. As  part of its community service efforts, a water well was donated to the Shanxi Military Integrated Training Base – Greka used its expertise to drill a water well for the training base so that the facility may become self-sufficient in its supply of fresh clean water.

As a result of this water well, Greka was presented the “Excellent Enterprise” award.  Chairman and CEO Mr. Randeep Grewal was also presented  a personal award for his care and contribution to the local community.   In addition, Mr. Zhang Boa Zhuang, General Manager, was also awarded by the Jincheng committee in recognition for being an outstanding individual.

Greka has also been supporting senior citizens within the community by recruiting and training retired service men for roles within its gas operations.

The event comprised of a ‘Handover Ceremony’ of the water well, a site visit, a medal ceremony and a gala dinner.  It was attended by over 300 guests including Mr. Zhu Xiao Dong, Commissioner of the Shanxi Armed Forces; Mr. Lv Rui Zhou, Chairman of Institute of Reformation and Creation; Mr. Shen Hui, Vice chairman of Jin Cheng Committee of the Chinese People’s Political Consultative Conference as well as Political Commissar Mr. Hao Chong Fu.

Saturday 14^th April saw the first round of the “Greka Cup” basketball competition. This great initiative from the Human Resources Team was designed to give business units the opportunity to work together as a team, in a fun and energetic environment. Not only did the players have a great time, but so did their very loud and creative support teams.

The 8 teams were from each business unit and support department . Over 100 players, cheer leaders and supporters spent the day making new  friends and showing off their athletic talents. The team spirit and positive energy was impressive and inspiring.

ZHENGZHOU, April 20 (Xinhua) — Leading gas producer Greka  will finish the construction of 25 gas stations in central China’s Henan province by the end of 2012, chairman of Greka said Friday.

The 25 coalbed methane (CBM) gas stations, mainly scattered in northern Henan, are expected to supply a total of 500,000 cubic meters of CBM daily, said Randeep S. Grewal, chairman of Greka.

Coalbed methane (CBM) is a form of natural gas extracted from coal beds. It has become an important source of green energy in China in recent years.

Greka signed a contract with the Chinese government on CBM exploitation in 1997. The company spent the following 11 years coming up with the advanced technology necessary to exploit CBM in China, as the country’s geology made it impossible to use older technology, Grewal said.

According to the country’s 2011-2015 plan for CBM development, China aims to increase its CBM output to 30 billion cubic meters every year by 2015.

China has an abundance of CBM resources, ranking third in the world.

http://news.xinhuanet.com/english/china/2012-04/20/c_131541355.htm