Here's an EMAIL that I received today from Mike McKenzie who is an expert on the Polish Concession. The email is verbatim with the exception of my name and contact info. I had called him for some clarification, and here's the response. Read the whole thing, its well worth your time.
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Mr.-------------,
The Concession lies in the heart of the Upper Silesian Coal Basin, Poland. The coal bearing strata is Upper Carboniferous (Pennsylvanian) in age and is found a depths ranging from 1,500’ to 4,000’ across the Concession. During the Communist era, coal was one of the leading producer of hard currency, thus great attention was given to coal. Some 250 core holes were drill over the Rybnik Coal Reserve looking for potential sites for mines. This also identified the areas best suited for CBM development.
The majority of these core holes lie on the McCallan concession. The resulting data from the cores holes show the coal section is between 300-400 feet thick and has an average gas content of 250 standard cubic feet per ton.
The Warszowice and Bzie-Debina Reserves Area portions of the Concession sit on top of a geo-thermal high. The highest gradient exceeds 2.5 degree F per 100 feet. Highest coal rank correlates with increasing depth and areas of high geothermal gradients. The area of the Concession is quite favorable and has medium volatile bituminous to high volatile A bituminous coal.
Laboratory analysis by Coal Gas Technology, Inc. of Salt Lake City, Utah confirmed: (a) the coal has high gas storage capacity and favorable desorption properties; (b) medium volatile bituminous to high volatile A bituminous coal; and (c) the coal has good cleat and fracture development and that these fractures appear to be open at depth. Without saying, these coal characteristics are very favorable for coalbed methane recovery.
Structural faults and folds are present through-out the concession. The presents of normal, strike-slip faults suggests extension, tensional relief and thus, a lower in-situ stress. Low in-situ stress allows fractures and cleats to be more conductive and enhance the permeability. This is an important factor for efficient recovery of methane.
There is an enormous coal resource in the Concession. Assuming 40,000 acres, a net thickness of 250 feet, an average gas content of 250 scf/ton, a recovery factor of 65%, the estimated recoverable gas reserves would 2.925 trillion cubic feet of gas. Assuming a $3 per mcf profit, the estimated future profit would be US$ 8.8 billion.
Reserve Sensitivity…So there isn’t 250’ of coal being produced, if 150’ or even only 50’ of coal produced, very good profits will be realized.
Assuming 150 feet of coal and the same parameters above, the estimated recoverable gas reserves would be 1.755 trillion cubic feet of gas. At $3 per mcf profit, the estimate future profit would be US $ 5.3 billion.
Assuming 50 feet of coal and the same parameters set out above, the estimated recoverable gas reserves would be 585 billion cubic feet of gas. At $3 per mcf profit, the estimate future profit would be US $ 1.8 billion.
I have worked or kept up with this project for nearly 17 years and in my opinion, this project has substantial proved undeveloped CBM reserves, is straight forward operationally to develop and is an extremely low risk project as the location of the coal, the depth of coal, the thickness of coal and the gas content of the coal is known. The unknown is how much gas can be gotten out and what price will it be sold at.
Attached is a map showing the concession area along with the core holes on the property.
Mike McKenzie
Michael McKenzie
Petroleum Geologist