what's the go?, page-30

Hello Hendrous,

"So from my basic understanding, it seems EPG have thick enough coal seams to target but the completion techniques and well design needs to be refined"

Your basic understanding is correct. More than 60 m net coal in Lorraine, with seams up to 14 m thick and gas content up to 400 scft, but low/ very low permeability.

"the previous program did boast they had shown they could drill horizontally"

You can defeat tight formation by increasing the surface between the borehole and the formation.
- by drilling drains and laterals
- fracturing the formation and stuffing the open fracture with sand to prevent it to close again once frac pressure bleeds off.
- using both methods consecutively.

Both methods have their indications but they are expensive and require some refining. Lorraine's coal is very strong compared to most of coals anywhere, so they are very suitable for directional drilling.

EGL's program at Folschviller 2 was then consistent and not a mere "show off" of technical skills (not totally convincing, if I may add). If EGL wants to produce gas there, it will have to overcome the permeability problem. This is the idea behind Folschviller.
The stake is high, If EGL can demonstrate that it can produce from laterals the status of most of the ressources of the basin might change overnight to reserves.

If the drain option fails, there are other options that would remain open such as fracturing and UGC (UGC would provide destressing of the underlying coal seams and therefore result in 2/3 orders of permeability higher. The coal would be then suitable for classic well/drain production. This would allow ECBM and CO2 sequestration... bright future.

The work over and dewatering has not started yet, and it could be a long operation (several monthes) before gas appears, or gas might never appear because the well has crossed fractures that bring water. This failed test would not be conclusive as for the potential of the area.
Regarding the overall strategy of EGL. Folschviller is risky , by this I mean that the results are not guaranteed and the implementing cost is high.

By comparison, Gazonor CMM play is much easier to developp. Shallow depths (<400 m) and good knowledge ensure that any drilling will meet mine gallery and provide some gas. A couple of judicious wells could increase the production and bring extra cash. An other cheap possibility would be to reopen some old mine pits... It has not escaped gazonor team.

My feeling is that is was not implemented because management focused on lorraine and it has drained most of the cash. EGL constantly acted as if the money tap would never close and it permitted much more acreage than it's technical, financial and human ressources will allow it to adress in a correct way (Including commitments towards governemental authorities).

This head up was doomed to meet the a principle of reality. The crisis only made it happen earlier. That's why EPG is now obliged to look for JV's with any partners how unreliable they look.

EDF agreement is not bringing one Euro to Gazonor for developpement, the fact is that EPG is currently paying an extra engineer to answer EDF's questions and there is no guarantee of return on investment. There are other possible partners on the electrification project, fortunately.

Moreover, EDF is famous for it's allergy on free market and competition. It is acting like a Boa constrictor on possible competitors in France... eating with the devil is OK as long as you have a long spoon.

Regarding the Moaming fund, I have already posted on below, and from their acts I think that I was right. M is going to stay in the capital as long as EPG is not stabilized and not heading in the right direction, M will not increase it's share unless necessary to keep the leadership at the board, M will not trade, as keeping the SP is not the first priority for EPG.

It's first priority is to get funds for operations... The official line is not live as long as EPG can not raise minimum 10 millions euros in 2010 for it's projects.