Primeline Energy Holdings Inc. - Lishui Gas Play



	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 Lishui 36-1 discovery has shown that a hydrocarbon system exists in the Lishui Basin, much of which is within Block 25/34. Near to the gas discovery there are several prospects and leads which have been identified in the 3D seismic data and which have similar geological and geophysical characteristics to Lishui 36-1. These analogous prospects, referred to as the Lishui Gas Play, are the focus of Primeline's current exploration programme. Primeline has so far obtained and interpreted a total of 737 sq km of 3D seismic data over the area of the Lishui Gas play and has confirmed the existence of channel and canyon systems which are believed to influence the distribution of sand in the Basin and in the Lishui 36-1 gas discovery. Primeline has used the latest seismic analysis techniques for lithology and hydrocarbon prediction to characterise the Lishui 36-1 gas discovery and has extrapolated these characteristics into the 3D volume as a predictive tool for identifying prospects in the canyon systems. In this way Primeline identified six prospects and ranked them for drilling priority based on their various seismic characteristics. Primeline agreed with CNOOC on the two best locations for the next exploration drilling in the Block 25/34, being LS35-3 and LS30-3, shown on the map below, and on 12th April 2010 , Primeline commenced the drilling campaign when well LS35-3-1 was spudded and resulted in a discovery. The LS35-3-1 discovery is significant in that it confirms that hydrocarbons have migrated to and are trapped in the channel systems on the west flank of the West Lishui Basin. Primeline is currently carrying out a post well evaluation to assess the volume and nature of the resources discovered in LS 35-3, refine the petroleum system model and high-grade and further define prospects for further exploration drilling. Four channel systems have been mapped and delineated in Primeline's 3D area, with others being recognised to the north of that area and which is covered by 2D seismic data.