Primeline Energy Holdings Inc. - Exploration History



	Introduction Exploration History Lishui 36-1 Gas Field Development Lishui Gas Play Block 25/34 Petroleum Contract Dynamic Gas Market Gas Agreement and Overall Development Program Reserve Report	The area which now comprises Block 25/34 was explored by different Chinese companies in the 1980s. Various sets of seismic data were shot by the Ministry of Geology (MOG) and China National Offshore Oil Corporation (CNOOC). Two wells were drilled by MOG, Lingfeng-1 (1985) and Shimentan-1 (1987), and both encountered hydrocarbons. After securing Block 32/32 in 1994, Primeline conducted a detailed technical evaluation of the area between 1994 and 1997 using different vintages of seismic data, reprocessed seismic data, new seismic data it acquired and data from previously drilled wells. Using this evaluation Primeline successfully identified, drilled and tested Lishui 36-1-1 in late 1997 as a gas discovery. In 1998-9, Primeline completed a 233 sq km 3D seismic programme over the area surrounding the Lishui 36-1-1 discovery to help delineate the extent of the discovery. Following this, in late 2000, CNOOC and Primeline successfully drilled and tested the appraisal well, Lishui 36-1-2, which confirmed a similar reservoir to that discovered in Lishui 36-1-1. In late 2001, CNOOC and Primeline drilled a second appraisal well, Lishui 36-1-3, an aggressive step-out well 7 km away but this well failed to encounter any hydrocarbons. In 2005 and 2006, having acquired rights to Block 25/34 (which effectively replaced Block 32/32) Primeline reprocessed the existing 233 sq km of 3D seismic data, achieving a significant improvement in quality which allowed a reliable revision of the discovered volumes. During 2006/2007, Primeline acquired a further 550 sq km of 3D seismic. That data was merged with the previous 3D data to make a total full fold data set of 737 sq km, covering the Lishui 36-1 discovery and nearby prospects. The data was then processed and evaluated in order to define prospect leads and possible drilling locations. The evaluation confirmed the existence of channel and canyon systems and six prospects were mapped in this new play concept area which is now known as the Lishui Gas Play. Primeline has since been working on a dual strategy of developing the Lishui 36-1 discovery whilst continuing to explore for additional resources in the Lishui Gas Play and in the rest of Block 25/34. Development Agreements have been signed and CNOOC and Primeline are proceeding with the development of Lishui 36-1and are in the process of obtaining final government approvals. In the meantime, Primeline has commenced a drilling campaign to supplement the resources that can share the infrastructure that is going to be built as part of the development. A gas discovery was made about 15km south west of the LS36-1 gas field in June 2010 and Primeline will continue its exploration drilling campaign in due course.