Budding gas-producer TMK Energy is on track to start well-testing early next month at its Gurvantes XXXV project in Mongolia’s South Gobi basin.
Following the successful completion of three pilot production wells that perforated more than 60 metres of gassy coal, TMK has been on the trot installing surface facilities, together with associated civil works and infrastructure.
The company’s recent work has included connecting each of its wells to a metering skid, which measures water and gas rates produced from each well, in addition to a gas flaring system that burns any unused gas produced.
Water pipelines are also being laid out to each of the metering skids to carry produced water to a central temporary water pond, where it will be pumped to a final water storage area at the adjacent coal mine owned and operated by Mongol Alt LLC (MAK). It is the company with which TMK signed a cooperation and electricity offtake agreement with earlier this year.
The MAK mine is a big energy user in the Nariin Sukhait region and also has a high demand for water, which is a valuable resource in the South Gobi Desert. Supplying water to MAK removes the requirement for TMK to build and operate separate water storage facilities.
Under the agreement between the two companies, gas produced from TMK’s three pilot production wells will be used for modular power generation that will then be sold to MAK at the prevailing local wholesale price. The strategic deal provides TMK a clear pathway to early commercialisation by supplying electricity to one of the biggest users in the area.
Once surface installations are complete and following a short commissioning phase, the production wells are scheduled to be turned on in mid-July.
Based on independent modelling by SLB (formerly Schlumberger), TMK anticipates its gas flow rate to build over the six-month production test, enabling the company to assess if its gas rates are commercially viable for power generation.
The company’s pilot well program is aimed at better understanding the performance of the reservoir to help with its economic assessment and field development study of its 1.2 trillion-cubic-feet resource.
Since acquiring the asset some 18 months ago, TMK has drilled seven exploration wells, three pilot production wells and is now about to complete the construction activities associated with the first Pilot Well Program in the Nariin Sukhait area, an area which has extensive coal production infrastructure, high energy needs and nearby access to Northern China (via road and soon rail). TMK Energy chief executive officer Brendan Stats
Gurvantes XXXV is a joint venture between TMK (67 per cent) and Talon Energy (33 per cent). Talon bought into the project in January last year, signing a $7.44 million farm-in agreement with Telmen Energy – the project’s then-owner.
Under the terms of the agreement, Talon agreed to fund most of the proposed pilot well program. TMK has become the beneficiary of that deal after it picked up Telmen Energy the following month.
The company’s acreage covers a whopping 8400 square kilometres of Mongolia’s South Gobi basin, which is shaping up to be one of the world’s most prospective coal seam gas basins. The project also lies just over the border to the Northern China gas transmission and distribution network.
China has an insatiable appetite for gas, clocking in as the world’s third-biggest buyer. It imports the fuel in gaseous form via long-distance pipelines from central Asia (predominantly from Turkmenistan), Russia and Myanmar.
In addition, China also imported 63.4 million tonnes of tanker-shipped liquefied natural gas (LNG) last year, with total LNG imports meeting 41 per cent of that nation’s demand.
TMK appears to have mapped out a clear path to production at its Mongolian gas play, with more than one willing customer in the wings prepared to purchase its sought-after product.
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