Pacific Asia China Energy's joint venture drilling subsidiary, PACE Mitchell Drilling and its marketing partner in China, Australian Mining Services International, have participated in the signing of a multi-company degasification contract with the Shenhua Ningxia Coal Group.

This degasification project has been nominated as one of the six Special Safety Projects for 2007 by the State Administration of Coal Mine Safety. It emphasizes the need to improve mine safety and productivity, and to harness an enormous untapped, cleaner burning energy resource. The companies say this degasification initiative represents a significant step forward to reducing harmful methane gas emissions from coal mining activities that contribute to the global warming process.

Shenhua Ningxia is a unit of Shenhua Group Corporatio, the largest coal producer in China. The contract, valued in excess of AU$10 million provides for a turn-key operation and will include 44,000 metres of "Surface-to-Inseam" and "Underground-in-Seam"drilling using the joint venture Dymaxion platform. PACE Mitchell Drilling expects to receive about 55% of the total contract value. The Joint Venture's first Dymaxion rig, which is presently being transported to China, will be deployed to the Baijigou Coal Mine site, a 2,000 tonne per day coal mining operation located in Ningxia Province. Degasification operations will include complete gas drilling and pre-drainage of the mine site.

Degasification is the removal of dissolved gases from liquids, especially water or aqueous solutions, in the fields of science and engineering. There are numerous possible methods for such removal of gasses.

Tunaye Sai, President of PACE, stated "This first contract represents a new milestone for PACE and its joint venture partner Mitchell Drilling Contractors Pty Ltd. Our combined efforts have achieved this result within a short period of time. The Dymaxion SIS drilling technology will greatly help the Chinese coal companies safely mine their coal by turning 'killer gas' into usable energy. This same technology will also be used to drill for coalbed methane gas within PACE's Guizhou CBM project in the near future. Other foreign operators of CBM projects in China have also expressed their interest in using the joint venture technology to drill in their CBM blocks".

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