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GEOMET-LED GROUP PURSUES METHANE PROJECT IN B.C.

July 18, 2007

Publisher: The Globe and Mail

CALGARY -- A consortium led by Atlanta-based GeoMet Inc. is inching closer to developing a pilot coal-bed methane (CBM) natural gas project in British Columbia, in what could be the first such development seen in the province.

Earlier this month, GeoMet and its partner, Vancouver-based Canada Energy Partners Inc., approved the development of a 25-well pilot CBM project in the Peace River area near Hudson's Hope, B.C.

While both firms are tight-lipped about how much gas the project might develop or how much it will cost, the pilot could be in operation as soon as 2008, depending on regulatory approval and the process of land-access negotiations with First Nations groups, the partners said.

"It's a project that we have a lot of hope for, and this decision is certainly a positive for the development," said Stephen Smith, treasurer for GeoMet, which has been involved in CBM projects in the United States since 1993. "Having said that, we have no commitment to doing anything more than the pilot at this stage, as we need to understand the geology of the area and the productive capabilities of the wells."

Coal-bed methane is a type of gas that lies near the surface in seams of coal and requires wells to be drilled for it to be extracted.

While companies such as EnCana Corp. and Nexen Inc., both of Calgary, already produce gas from CBM projects at Alberta's Horseshoe Canyon and Upper Manville fields, the GeoMet project could be the first such development to be brought on stream in B.C. However, other Calgary companies such as Talisman Energy Inc., Shell Canada Ltd. and Canadian Spirit Resources Inc. are also looking at prospects in the province.

While there aren't any projections yet on output, Canada Energy Partners is bullish on just how much gas the play might hold.

Yesterday, the company released a report by Calgary-based Sproule Associates Ltd. that indicates the Peace River project might contain as much as 2.313 trillion cubic feet of gas, although it's unclear how much of that would be recoverable.

"We're finding that there appears to be a lot more gas in these formations than in other [Canadian] coal beds," said John Proust, director at Canada Energy Partners.

"Time will tell how much we can get out of ground; but it's an attention-getter."

CORRECTION

Thursday, July 19, 2007

Publisher: The Globe and Mail on Page B2

GeoMet Inc. is based in Houston, not Atlanta. Also, GeoMet and Canada Energy Partners Inc.'s 25-well coal-bed methane project is not a pilot, but is the first stage of a commercial project. Incorrect information was published yesterday.

 


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