Perth-based TMK Energy has reached a pivotal milestone at its Gurvantes XXXV coal seam gas project in Mongolia’s South Gobi Basin, progressing its three-well pilot program into the final commissioning phase.
The company has revealed that downhole pumps and driveheads have been successfully installed in the wells and the construction of all surface facilities and associated infrastructure is now complete.
Results from the drilling of the three pilot wells at Gurvantes – known as Lucky Fox 1, 2 and 3 – produced impressive intersections for TMK with respective thick gassy-coal interval hits of 60m, 62m and 68m.
The company will now be keen to see results from extended production testing, which will kick off next week and is expected to provide a better understanding of reservoir performance. The results will guide an economic assessment and field development study of the 1.2 trillion cubic feet, high-methane resource.
Gas produced from the pilot wells will not go to waste, with TMK and Mongol Alt LLC (MAK) entering into an energy offtake agreement in March this year.
MAK is one of Mongolia’s biggest and most successful group of private companies and an active coal miner in the area – and hungry for power and water. MAK owns the coal-mining lease on which TMK operates Gurvantes.
The deal provides TMK with a clear pathway to early commercialisation and will see gas produced from its pilot wells used for modular power generation at the site, which will then be sold to MAK at the prevailing local energy wholesale price.
The company has also agreed to provide MAK with the water its wells are expected to produce in early stages of operation prior to “gas breakthrough”. MAK will store the piped water at its adjacent coal mine where the harsh desert climate of the South Gobi Desert makes it difficult to come by.
The last couple of weeks have seen another key deliverable with the successful installation of the pumps and the drive heads as well as initial testing of the pumps confirming that all three wells are now operational and ready for start-up. The final stage will be the careful and measured start-up of the pumps to commence the dewatering process which we expect will be a 2-3 month process, after which we hope and expect to see initial gas breakthrough which is expected to build over the subsequent months. TMK Energy chief executive officer Brendan Stats
Gurvantes XXXV is operated by TMK as part of joint venture with Talon Energy, which is also Perth-based and will satisfy the company’s intentions of long–term gas production in Mongolia, where it has an exploration licence for 15 years. In addition to the local Mongolian need for gas, other market opportunities for TMK includes China’s significant natural gas market.
China is the world’s third-biggest buyer of gas, importing via long-distance pipelines from central Asia, Russia and Myanmar. That nation also imported 63.4 million tonnes of tanker-shipped liquefied natural gas (LNG) last year, with total LNG imports meeting 41 per cent of its demand.
The Chinese border is tantalisingly close, less than 20km south of the Gurvantes project. China’s huge west-east gas pipeline sits another 280km across the border.
TMK is now sitting on a prized product in a tactically-significant part of the world. Poised to immediately monetise the project’s test gas locally, it may not be long before the company has bigger buyers on the phone.
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