OREANDA-NEWS.  September 04, 2012. Exoma Energy (ASX: EXE) is exploring its Galilee Basin permits in partnership with one of China’s major national oil companies, CNOOC.

Brian Barker, chairman of Exoma Energy, told attendees at Proactive Investors "Stars in 2012" One2One Investor Forum in Sydney recently that China is looking to western projects to learn more about shale oil and gas technology.

The joint venture partners are currently undertaking an aggressive drilling program targeting coal seam gas, conventional oil as well as shale oil and gas targets in the Galilee Basin, Queensland.

“China is still developing its own knowledge of shale technology. There is a lot of more advanced knowledge in the west at the present time than there is in China.

“One of the strategies CNOOC have, and not only CNOOC but also Sinotech and PetroChina, is they’re taking an interest in these projects in Australia, and also in North America, because they see it as a way of learning what the western technology is.

“Secondly, in China, they haven’t yet established commercial production from the shale. There is a lot of work being done on it, but they haven’t got there yet.

“In our case the shale is more liquids prone and, from the CNOOC perspective, if there are multi billions of barrels of oil in place then that has some direct impact on China’s national interest.”

CNOOC also has another reason to turn to projects like Exoma’s, with its direct interest in an energy plant at Gladstone, which it is trying to source feedstock for to support its investment.

The joint venture partners recently spud the Nora-1 exploration well that targets both coal seam gas and shale oil and gas.

The well is part of a 22 well drilling campaign Exoma and CNOOC are drilling to appraise the coal seam gas, conventional oil and shale oil and gas resources in their acreage, which covers 27,000 square kilometres.

These are designed to deliver a strategic understanding of the basic geology within the 5 permits with the objective of defining the most favourable areas in which to develop reserves.

Potential near-term, small scale production

Barker also told investors there is a relatively small scale gas line in the Galilee Basin that runs up to the small township of Barcaldine, which could be tapped into in the interim for small scale production.

“As an interim measure one could displace the gas coming into the Barcaldine power station, providing some gas into Barcaldine to re-start that plant, and then you could reverse flow the gas down that line, but that is relatively limited size.

“You could then build a much larger pipeline and take it down into the southwest Queensland gas pipeline and then you’re into the whole gas market.”

Barker said CNOOC is keen for Exoma to build a new gas pipeline directly east so it goes into the Gladstone plant.

Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.