Although much smaller companies – for example, Far East Energy Corporation (OTC BB: FEEC) – each one had connections within China to obtain massive CBM gas concessions – some about one-third the size of Rhode Island. Far East Energy, deceivingly tiny as an energy company (market cap: $136 million), developed its relationship with CUCBM through previous political connections. Chief Executive Michael McElwrath served briefly as Acting Assistant U.S. Secretary of Energy for Fossil Energy under President George Bush, Sr. Chief Financial Officer Bruce Huff was formerly President and Chief Operating Officer of Harken Energy, a company with which President Bush, Jr. was involved. A technical advisor, Don Gunther, was formerly Vice Chairman of the Bechtel Group, a company whose alumni populated the Reagan and Bush administrations.
In Far East Energy’s case, the plum award was a 1.3-million-acre concession in China’s coal rich Shanxi and Yunnan provinces. The properties have potential recoverable CBM resource of between 9.2 and 12.5 trillion cubic feet. They are situated near two major national pipelines running to both Beijing and Shanghai. According to the company’s website, when the Shanxi project is fully developed, it could sustain an estimated 3,000 horizontal gas wells. If that’s the case, this might become one of the world’s largest CBM projects.
Chairman John Mihm had been a senior vice president for Phillips Petroleum, prior to the company’s merger with Conoco, and was involved in supplying technical support for the ConocoPhillips Shanxi project before it was farmed out to Far East Energy. If ConocoPhillips participated only on an overriding-royalty basis, then Far East would partner with CUCBM and own 66.5-percent of Shanxi. If ConocoPhillips participates, Far East would retain a 40-percent interest.
