Ivanhoe Energy say that Sunwing Energy Ltd., the company's wholly-owned subsidiary, has commenced drilling at Zitong-1 located in Sichuan Province, China's most prolific gas producing region (see accompanying photos). Sunwing is the operator of the 659,840-acre (1,031 square miles) gas exploration block in Sichuan, and it holds a 90 percent Contractor Interest in a Petroleum Contract with PetroChina Company Limited. Mitsubishi Gas Chemical Company of Japan holds the remaining 10 percent Contractor Interest.

Zitong-1 is targeting the Guan structure, a massive 70-square-kilometre structure in the centre of Sunwing's block in Sichuan. Zitong-1 will target tight gas in fractured formations using horizontal drilling and established, multi-stage fracing technologies similar to those that have led to enormous gas developments in various tight gas projects in North America. Each target in the Guan structure is estimated to have potential of 0.3 to 0.5 trillion cubic feet of natural gas.

Total depth of the Zitong-1 well is planned to be approximately 4,500 metres and it is expected to take up to six months to drill and test the well. Zitong-1 is expected to cost US$14.5 million to US$17.5 million which includes plans to drill, test and case the well.

Yixin-2 - second well to begin drilling in July Preparations for Sunwing Energy's second well location, Yixin-2, in the Zitong block are also underway and Sunwing expects to commence drilling this well in July 2010. Yixin-2 is being drilled as a twin well of Yixin-1, a well drilled by Sunwing in 2007 that generated flow rates of up to 4.0 million cubic feet per day before being shut down due to certain equipment failures during the testing program. Yixin-2 will be directionally drilled to allow the second wellbore to be located within 67 metres of the Yixin-1 at total depth.

Tags: Ivanhoe Energy Inc.