As its name suggests, Far East Energy’s attentions are focused in China where the company hunts down precious reserves of coalbed methane. This form of natural gas is one exceptional alternative to conventional fuels, and as worldwide oil stores rapidly diminish, even the oil giants themselves are seeking to acquire exploration rights for methane.

Yesterday the company announced the completion of its first horizontal well, in the coal beds of Shanxi Province, China. The well was cut nearly three kilometers into the coal seam, with a short-reach and a deviated also being completed. According to initial findings, the well area – known as the Qinnan Block – contains relatively high levels of gas reaching 600ft³ per ton of coal.

CEO Michael McElwrath spoke of the achievement: “Our first horizontal well in the Qinnan Block confirms that horizontal wells can be drilled at a low cost in the area. We engaged a Chinese company on a turnkey contract to drill this well at a total cost of approximately US$1.3 million. Based on these drilling costs and other results in the area, we believe the Qinnan Block could potentially provide very attractive rates of return.”

With Far East Energy recently accelerating operations in the region, the 4,280 square kilometer well site stands to achieve production sooner than expected.

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