Sino Gas & Energy Holdings Limited (“Sino Gas” ASX: SEH) is an Australian energy company focused on developing Chinese unconventional gas assets.

Sino Gas holds a 49% interest in Sino Gas & Energy Limited (“SGE”) through a strategic partnership with China New Energy Mining Limited (“CNEML”). SGE has been established in Beijing since 2005 and is the operator of the Linxing and Sanjiaobei Production Sharing Contracts (PSCs) in the Ordos Basin, Shanxi province.

SGE: Operating in China since 2005

SGE has operated in Beijing since 2005 and holds a portfolio of unconventional gas assets in China through Production Sharing Contracts (PSCs). SGE holds a 64.75% interest in the Linxing PSC and is partnered with CUCBM. SGE holds a 49% interest in Sanjiaobei PSC and is partnered PetroChina CBM. SGE has a 100% working interest during the exploration phase of the PSC, with SGE’s PSC partners being entitled to back-in upon Overall Development Plan (ODP) approval, by contributing development and operating costs in line with their PSC interest.

The PSC’s are located in Shanxi province, North China, in the Ordos Basin and cover an area of over 3,000 km2 and are prospective for coal bed methane and tight gas.

Sino Gas announced first pipeline pilot sales from both PSCs on December 1, 2014. More details on the pilot program is available here.

Sino Gas: Strategic Acreage in the Ordos Basin

The Ordos Basin is the second largest sedimentary basin in China and the country’s largest gas-producing region. The area has mature field developments with an established pipeline infrastructure to major markets. Rapid economic development is being experienced in the area in which Sino Gas’s PSC’s are located and natural gas is seen as a key component of clean energy supply in China.

Extensive seismic and other subsurface studies have been conducted over the majority of Sino Gas’s Linxing and Sanjiaobei PSCs. In addition, a large number of exploration, appraisal and production wells have been drilled. With commercial flow rates achieved from the extensive testing program, the company booked its first proven and probable reserves in 2012.

PSC Location

Sino Gas’ PSC sit on the eastern edge of the Ordos Basin, the largest gas producing region in China, with regional pipelines providing access to key demand centres.

Rapid economic development is being experienced in Shanxi Province, with the 12th 5 Year Plan (2011 to 2015) confirming new energy initiatives within the province.  Gas distribution options include: major long distance pipelines, dedicated provincial gas pipelines, and the transportation of the gas following compression.  The potential markets for gas include commercial, industrial and gas fired power generation.