Georgian Govt OKs Mtsare Khevi Pipeline for Frontera

Frontera Resources Corp. announced that it has received approval to proceed with the installation of the 5-mile (8-kilometer) pipeline and related facilities within the Mtsare Khevi field from the Georgian government. As previously announced, equipment required for the gas pipeline has been procured, mobilized, and stacked in the field and in key staging areas. First gas production is now expected within 120 days. The infrastructure will accommodate production from currently shut-in wells, and the Company is targeting production of approximately 2 million cubic feet per day of gas (57,000 cubic meters per day).

The Mtstare Khevi Field is situated within a larger play area of approximately 31 square miles (80 square kilometers) referred to as the Mtsare Khevi Gas Complex and encompasses gas targets found between 984 and 16,404 feet (300 and 5,000 meters) in depth. Based on Frontera's internal estimates, analysis has revealed significant gas potential throughout this area of up to approximately 1.2 trillion cubic feet of gas in place (28 billion cubic meters) and up to approximately 700 billion cubic feet of recoverable gas (19.8 billion cubic meters). An integrated geologic study, including data from a number of existing wells within the area such as the V-#18 well, previously referenced in the Company's Jan. 31, 2012 announcement, is currently in progress to better understand and define the extent of this potential throughout the greater Mtsare Khevi Gas Complex.

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Juniors Strike Georgian Gas Deal

Energy juniors Range Resources, Red Emperor Resources and Strait Oil and Gas UK have reached an agreement with Georgian Industrial Group for the joint development of a coal-bed methane (CBM) project in the Republic of Georgia.

A development company is to be set up, in which GIG will hold a 50-percent interest, which will begin feasibility and technical studies that will be followed by a three-to-four well pilot project around the Tkibuli-Shaori Coal Field. It is expected that six CBM wells per annum, each producing up to 500,000 cubic feet of gas per day, could be drilled on the coal field – which contains contingent resources of approximately 400 billion cubic feet of gas.

GIG has agreed a 'take-or-pay' arrangement for all the gas produced by the development company.

Range Resources Executive Director Peter Landau commented in a statement Monday:

"This is a major opportunity for the company and the significance of the project should not be understated. The partnership with the Georgian Industrial Group, the largest industrial and holding company within Georgia, is a milestone towards establishing itself in a country that still remains almost entirely dependent on imports of foreign natural gas."

Energy analysts at London-based FoxDavies Capital commented that the deal with GIG is a major step forward for both Range Resources and Red Emperor since it "(i) alleviates one of the key issues regarding [their] portfolio; (ii) provides the prospect for near-term cash flow; and (iii) means that neither company [has] to continue to pay for the acreage as the partner will take it forward."

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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