PEACE RIVER COALBED GAS
PROJECTNE BRITISH COLUMBIA
Hudson’s Hope Gas, Ltd
TOPICS COVERED Introductory key points Background / History Project partners Location / Setting Coalbed gas resource Technical/ Operational Approach Present status Stakeholder / First Nations aspects
KEY POINTS First commercial coalbed gas production
in BC Very large CBG resource in NE BC BC Government incentives very
important Hudson’s Hope community and
stakeholders play important role in project success
LOCATION & SETTING 50,000 + acre tenure position Western edge WCSB Gething Formation coal measures Near town of Hudson’s Hope & inside its
District Municipal Boundaries Land use – Mix of agriculture & forested
Crown land
Peace River CBG Project
From: Coalbed Methane Potential in British Columbia – BC MEMPR
PEACE RIVER CBG – TENURE HOLDINGS
Hudson’s Hope(Approx town area)
Drilling Licence
PNG Lease
Spectra Energy Pipeline
PROJECT STRUCTURE
JVA – Two partners, each holds 50% WI GeoMet, Inc. (NASDAQ: GMET)
E & P company - CBG primary emphasis Corporate HQ – Houston; Operations center- Birmingham CBG production & development programs in Alabama,
Virginia, West Virginia and British Columbia Operator of Peace River Project (through Hudson’s Hope
Gas, Ltd….GeoMet Canadian subsidiary) Under JV, GeoMet 50% WI includes natural gas rights
from surface to bottom of Gething coal measures
Canada Energy Partners (TSX-V: CE) Exploration & Development company – HQ in Vancouver Good land position in areas of multi-zone potential in NE
BC Participates in multiple JV projects
PROJECT HISTORY
Peace River Corp (PRC) –First Drilling Licences in 2001 PRC initiated exploration/testing and community, First
Nations Engagement Several test wells drilled by 2004; additional DLs JV with GeoMet in 2004 Hudson’s Hope Gas, Ltd (HHG) - Canadian subsidiary
of GeoMet, became Operator of Record PRC merged interests with Canada Energy Partners HHG drilled additional wells – Core, production test &
water disposal First commercial CBG production in BC –
December 08
Geologic Setting – Hudson’s Hope area at extreme western edge of W. Canadian Sedimentary Basin - Tenure located east of disturbed belt
Courtesy of: Barry Ryan
PEACE RIVER CBG PROJECT AT WESTERN BOUNDARY OF WCSB
Approx HHG Tenure
COALBED GAS RESOURCE – GEOLOGIC SETTING
Gething Formation – Lower Cretaceous cyclothemic coal measures
Numerous well-cleated, bright coal seams Predominately High-Vol A and Med-Vol bituminous Cumulative thickness – project average 15 m Typical Gething thickness of 200 to 300 m Shallowest coals at 300+ m; deepest < 1000m Average gas content – 400 scf/ton CO2 varies widely in Project area – Avg 10% in
producing area Gething overlain by 150 – 250 m marine
Moosebar Shale
GETHING COALS – WC BENNETT DAM
GETHING COALS AT WC BENNETT DAM
COALBED GAS RESOURCE
Exploration confirms very large gas resource Project Gross GIP – Estimated at > 1 Tcf
GeoMet Working Interest (From2/12/09 Press Release) The Peace River project is the first commercial coalbed
methane project in British Columbia, Canada and there are no other similar producing analogies in the region. As a result, initial proved developed reserves of only 4 Bcf were booked in 2008.
However, an additional 22 Bcf of probable reserves were estimated for the project by DeGolyer and MacNaughton.
Note: This does not take into account estimated reserves for at least 200 additional developable well locations.
COALBED GAS RESOURCE COAL CORE – CUT FOR DESORPTION MEASUREMENT
OPERATIONAL APPROACHExploration phase Wireline coreholes - geology / desorption testing Production test wells cased and fracced for extended
dewatering/production testing Several zones in various parts of tenure evaluated for
deep disposal potential 22 test wells drilled from 2002 – 2008 Most wells drilled on small pads – 100X100 m Production test wells
Surface casing set below fresh water zones 5 ½ “ production casing set below bottom coals Multiple zones perforated & fracced Frac types included slick water, nitrogen foam, x-link gels and
linear gels Wells equipped with down hole pumps and dewatered for
several months test gas & water volumes & quality
EXAMPLE HHG CBG WELL
HHG CBG WELL
OPERATIONAL APPROACHProduction Phase First production stage – Focus on SW part of tenure
Future wells to be drilled during Summer/Fall Reduces cost & provides Summer Drilling credit
Installed infrastructure for 8 production wells Electric power grid Low pressure gas gathering and produced water transport lines Gas and water – HDPE pipe buried in same trench Gas/water/electric power lines and access roads all installed inside
18 m permitted corridor Produced water piped to disposal well in south part of tenure Disposal zone – Baldonnel Formation
Constructed compressor/treatment plant in SW tenure 4-stage compression to meet Spectra Energy pressure specs Gas treatment – CO2 removal (Membrane system) High pressure steel line to Spectra Energy transmission line Plant and first of the 8 wells went on line late Dec 08
GAS & WATER LINE INSTALLATION
LOW PRESSURE GAS & WATER LINES
ACCESS ROAD/PIPELINE ROWROW RE-GRADED – READY FOR RESEEDING
18 m
ACCESS ROAD, PIPELINE ROW, POWER LINE
HHG COMPRESSOR/TREATMENT PLANT
PRESENT STATUS OF PROJECT Eight wells on Production-Active status Gas production in early April
Five wells: Production ranging 29 to 155 mcfd One well – Early peak of > 200 mcfdThree wells: Early dewatering stage – several
mcfd Water production in early April
All wells producing water Production ranges from 50 – 268 bpd
STAKEHOLDER / FIRST NATIONS
Local government / Community HHG works closely with District Municipality & community
to communicate plans and address concerns Public meetings & targeted engagement at all stages HH Mayor & Council and Custodians of Peace Country
provided effective forums for community engagement Community concerns at early project stages evolved into
better understanding of & much wider acceptance of project
Engagement continues as critical aspect of HHG’s presence in community
What are key components of HHG success in Hudson’s Hope? Community willingness to listen & give HHG chance to earn their
trust HHG listens to concerns and looks for ways to mitigate/reduce them Community recognition of economic growth & sense of fairness re
potential impacts
STAKEHOLDERS / FIRST NATIONS
Private Landholders Whether agreeable to use of property or not:
Concerns include interference with operations, loss in property value, impact on lifestyle and aesthetics
Bottom line – Want to be treated fairly How neighbors are treated is important
HHG listens and respond to concerns Consistent, documented approach to access agreements &
compensation Flexibility in location and construction of wells & infrastructure Looks for ways for landholder to benefit Responds to questions and problems immediately Looks at impact on community around landholder and works to
mitigate potential impacts
STAKEHOLDERS / FIRST NATIONS
Project Tenure in First Nations traditional lands West Moberly Saulteau Halfway River McLeod Lake (Project tenure south of Peace River)
HHG Engagement of First Nations Early in each project stage – solicits input into planning Follows OGC Consultation process & evolving provincial
policies Participant in Peace Moberly Tract ADR and SRMP
processes Recognizes concerns of First Nations and the need to
provide mitigating solutions
SUMMARY AND KEY POINTS Very large gas resource confirmed HHG applying CBG principles to new area Canada Energy Partners and GeoMet have
both played important roles in Project history
Gas and water production just beginning Effective stakeholder, community and First
Nations engagement is critical
POINTS TO TAKE AWAY WHETHER I SAID THEM OR NOT! Peace River Project has the first
commercial CBG production in BC The community of Hudson’s Hope has
been a large part of our success The tax credits and incentives the
Province has provided to industry are critical its continued growth
It’s colder up there than we thought.
Thank You