TMK Energy (ASX: TMK) is set to launch into drilling a further three production pilot wells at its Lucky Fox site that is part of its wider Gurvantes XXXV coal seam gas project in Mongolia’s South Gobi Desert.
The company has today revealed it has signed a contract with leading Canadian TSE-listed drilling firm, Major Drilling Group, to carry out the planned program.
Management says all site preparations have been completed in readiness for the drill rig’s impending arrival, which it believes will be within the next week. It notes that since securing significant environmental approvals in July, the company has procured and imported long-lead items including casing, wellheads, pumps and all ancillary drill equipment.
TMK expects the drilling to begin in the next fortnight and adds that the upcoming program is on a fixed price contract, about 28 per cent below the cost of the three wells drilled last year.
Management says Major completed last year’s three-well program on time and under budget and they are continuing to perform well, with little downtime. Final pad preparation, the excavation of drill sumps and mobile surface equipment site works have all been completed.
The company expects the three additional wells to provide the extra pumping capacity required to reach critical desorption pressures faster and expedite a significant uplift in gas production rates at the pilot well area within a shorter timeframe than would otherwise occur.
Signing of this drilling contract is an important step for the Company and the Gurvantes XXXV Project, which has transformed from an exploration concept three years ago, into a potential gas-producing project of great significance to both TMK and Mongolia. We look forward to being able to further demonstrate the significance of this already-discovered resource over the course of the next few months.
TMK Energy Interim CEO Dougal Ferguson
The company’s objective from the program is to prove commercial rates of gas can be produced from the upper coal seam at the site based in the rugged East Asian country. It also plans to install Distributed Temperature Sensing (DTS) technology during the work program, enabling valuable data to assist in identifying the most productive zones for gas and water within the 70m of upper coal seam.
Management says it has discovered a world-class coal seam gas resource in Mongolia that comprises superior technical attributes to many of its peers’ existing developed projects. It adds the contingent resource (2C) of 1214 billion cubic feet (BCF) of natural gas is Mongolia’s biggest and falls within its core Nariin Sukhait area consisting of 60 square kilometres.
TMK believes it possesses a potential significant exploration upside outside its core area, with a 5300 BCF prospective resource across its total 8400-square-kilometre ground.
The company’s Gurvantes project is ideally placed less than 20km from the Chinese border and close to existing gas infrastructure in northern China, such as the West-East Gas Pipeline. It presents a potential opportunity to supply China’s massive energy market, in addition to Mongolia’s gas-hungry domestic market.
Coal seam gas is considered a “clean transition fuel” because it produces about half the carbon emissions produced by coal-generated electricity and burns cleaner than other fossil fuels.
TMK’s project sits in an enviable position near huge energy demand and if the upcoming drill program can provide evidence of increased gas resources, it could be in the box seat to benefit from the global push for cleaner energy.
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