An exploratory venture in Coos County's coalbed methane reserves has renewed gusto behind it.

According to a press release from Torrent Energy Corp. - the parent company of the Coquille-based Methane Energy Corp. - investors in the group recently sank about $25 million more into the company, virtually ensuring major capital investments this fiscal year in the company's bid to extract natural gas from land just south of Coos Bay.

“We are encouraged,” said MEC President Steve Pappajohn during an interview Wednesday. “We're very encouraged by what we see every step of the way. We feel as though we are on the right course.”

The investment more than doubles the original investment in the Colorado-based Torrent's natural gas exploratory project in the Coos Bay basin, Pappajohn said, raising total expenditures on the local venture to around $45 million.

The funding is not hard currency, but rather $25 million in preferred share offerings, reflecting a substantial boost in confidence among investors for the project.

The company's top officials are not the only ones who have been encouraged by the test results. So have third-party entities, whose reports helped attract additional investors, Pappajohn said.

“If we weren't doing well, it would be difficult to find that type of financing,” he said.

Pappajohn declined to name the investors, who include private individuals and “institutional investors.” In addition, he said since MEC is a publicly traded company, people are buying and selling shares all the time.

Coos County officials were pleased with the announcement, since the county has a lease with MEC and stands to make a 12.5 percent royalty on gas sales.

“This is an opportunity that seems to be proving out every step of the way,” said Coos County Board Chairman John Griffith. “It would be millions (of dollars) for the county.”

The influx of funding will allow MEC to continue on with the testing and exploration it began in 2004, Pappajohn said. According to Torrent's press release, the $25 million investment will ensure the company has the funds to secure enough capital to generate gas production - and revenue - from the local project this fiscal year. Torrent's subsidiary in Southwestern Washington, Cascadia Energy, also will receive some funding, Pappajohn said. However, a “major portion” of the $25 million will go to MEC.

The share offering isn't a done deal. It must gain approval from the federal Securities and Exchange Commission. Pappajohn did not know when that would happen, but said it likely would be within one year.

“There are thresholds and reporting and performance requirements that we have to abide by,” he said.

According to the press release, the financing could be put in jeopardy if the company fails to meet key deadlines, incurs cost overruns with the project, or discovers insufficient supplies of natural gas.

MEC is currently exploring coalbed methane reserves on 116,000 acres of land it owns or leases in Coos County.

The majority of the land extends south of Coos Bay to the Coquille River Valley, west to Seven Devils Road and slightly east of U.S. Highway 101. About 30,000 of those acre's mineral rights are leased from Coos County, 12,000 from the state of Oregon and about 15,000 from Menasha Corporation. The rest of the lands are comprised of agreements with private landowners and companies such as Roseburg Forest Products, International Paper and Kimberly Clark, Pappajohn said.

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Interestingly, news of several successful test drills in the Coos Bay basin project came nearly a month after the announcement of the multi-million dollar investment.

On Monday, a Torrent press release announced that MEC's coalbed natural gas pilot production operations indicated “strong flow rates” from wells located at the Beaver Hill and Radio Hill drill sites.

In Monday's press release, Torrent President and Chief Executive Officer John Carlson said the company is excited about the flow rates reported at the Coos Bay project.

“Sustained production rates from some of the wells should give us the opportunity to generate sales later this year,” Carlson said, adding that the company is confident it will see continuous commercial production rates from the Beaver Hill wells by year-end.

But without a nearby pipeline to bring it to market, just how that gas will be transported remains in question.

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In a public document sent to Coos County Legal Counsel David Koch recently, MEC's Coos County project manager Loran Wiese told the county MEC wants to sell liquefied natural gas this year from its reserves to Washington-based Prometheus Energy Co, which would install a facility at the drill sites and transport LNG by tanker truck to market.

Up until the introduction of the proposal, county officials had been working under the assumption that MEC would eventually tie into Coos County's natural gas pipeline, and begin collecting royalties. However, while the mainline of the county's pipeline has been completed to Coos Bay, North Bend, Coquille and Myrtle Point, an anticipated lateral line to Bandon - which MEC could tie into - has not been constructed, or even started.

Currently, MEC is venting the gas into the atmosphere. But Wiese said in the memo that the gas could be captured and sold.

On Wednesday, Pappajohn called the proposal with Prometheus an “interim” or stopgap measure, allowing MEC to extract and generate revenue from “stranded” well sites since the county's pipeline is not yet available.

“We're looking at all different options to get gas to market,” Pappajohn said. “We want to show investors we can bring it to market, as quickly as possible.”

But, he said, using Prometheus for the long term is not the preferred means of transport.

“You would always want to go into the pipeline,” he said. “It's more economically viable.”

Griffith said Wednesday he doesn't know when the county pipeline would be extended to Bandon.

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The flow reports have given the company a strong incentive to go forward with more drill sites, the Torrent press release said.

“The company is now fully financed to aggressively continue with its drilling program and to reach our corporate goal of initiating gas sales this fiscal year,” he said in the release.

Pappajohn said the test drilling will continue at least for the next couple of months.

Still, the company has not yet made the leap from its exploratory phase, to a full-on commercial phase. That will be determined, Pappajohn said, once the company learns how long it can sustain flow rates that are commercially viable.