http://tinyurl.com/2u6r5wEuropean Gas Limited Bags Another...

http://tinyurl.com/2u6r5w

European Gas Limited Bags Another French CBM Project As Investors Await News Of Potential Acquisition Of Producing Assets
Investors are still awaiting news of a planned acquisition by coal bed methane specialist European Gas Limited but in the meantime the ASX-listed firm has been formally awarded another CBM project in France. The Lons le Saunier permit covers 3,740 sq km on the Franco-Swiss border and holds CBM, conventional gas and conventional oil targets.

The permit covers the entire Jura Basin, which stretches 250 km and is reckoned to hold large but undefined quantities of coal. There is limited information about the coal deposits because the basin was only really evaluated as the French mining industry went into decline during the 1980s and there were concerns about subsidence and the gassy nature of the coals. What work has been done points to coal sections of up to 30 metres thick with high gas content.

The permit also offers the potential for conventional oil and gas exploration, with both types of hydrocarbon known in the area. The Valempoulieres gas field lies 30 km east of the town of Lons le Saunier. The field was discovered in 1961 and the Valempoulieres-3 well has produced 2.96 billion cubic feet of gas, with initial production of 3.5 million cubic feet per day. A number of smaller fields to the north and south of Lons le Saunier produced 0.5 bcf between 1957 and 1970. A stratigraphic well of 1943 recovered oil and a second well of 1954-55 produced 270 barrels of oil. A 1982 appraisal well produced 359 barrels of oil.

For the rest of 2007, EGL plans to assemble all the data on the permit and start reviewing it with a view to establishing sites for CBM stratigraphic core drilling (these test wells provide accurate data about, among other things, the coal’s gas content and permeability) and understanding the conventional oil and gas targets.

The company knows how this process works, having been through a similar exercise with its 460 sq km Lorraine permit in eastern France, near the border with Germany. That project is now getting ready to move into the pilot production phase after the success of two test wells, Folschviller St1 and Diebling St1, which is expected to lead to a considerable upgrade of the estimated resource in place. The initial Lorraine development will target almost 1 trillion cubic feet of gas (and there could be more than 7 tcf of gas across the Lorraine permit), with multi-lateral well completions possibly producing as much as 1 to 2 million cubic feet of gas per day.

This could prove a very significant project for EGL and investors will be keen to hear more about progress: drilling work for the two pilot wells will get underway in the September quarter and run through to March 2008. They will also be impatient for news about a possible acquisition: earlier in July EGL announced a funding agreement for €36 million (A$58 million) to help it buy a series of producing gas assets in Europe and for working capital purposes. No further details of the proposed acquisition have been released as ASX-listed EGL is still in the due diligence process and is bound by confidentiality clauses. The addition of producing assets would be welcome: it would bring financial stability and aid with future financing as the company seeks to advance its Lorraine and other CBM projects in France. These include the Gardanne CBM project in southern France, where structural modeling appears to indicate a larger than expected CBM resource, the St Etienne Permit in the centre of the country, where a methane land survey is underway, and, of course, the new Lons le Saunier permit.