Elixir Energy (ASX:EXR) was enjoying a robust start to the day in the first hour of trade as the company reported the successful pumping and flowing of natural gas at its pilot plant project harvesting the company’s Nomgon IX coal bed methane acreage.
Gas is currently being flared at the pilot facility while the company continues drilling its next series of appraisal wells labelled the ‘Big Slope’ targets.
The successful flowing of gas makes Elixir the first smallcap company to develop a natural gas fracking project to pilot demonstration in 2022 after the pilot plant really got underway in late September.
The pilot plant in question takes gas from the Nomgon-8 and Nomgon-9 coal bed methane wells after these two assets were prioritised for inclusion into the system earlier this year.
Elixir does note, however, one of the wells may need to be subject to a workover.
“Flaring gas so soon after starting our production pilot is an incredible result for the Company,” Elixir Energy MD Neil Young said.
“This is a first for Mongolia and we aim to establish a commercial flow rate in the months to come…our on-site team – with great assistance as always from their Australian counterparts - has done a fantastic job in installing pilot facilities to a world class standard and we thank them accordingly.”
As part of Elixir’s simultaneous development of its newest series of appraisal exploration wells, the company is currently overseeing the drilling of Big Slope-3 and Big Slope-4.
Big Slope-4 has intersected 38m of gassy coal body while Big Slope-3 hit 21.4m of the same.
Gas contents in the latter two Big Slope wells are reportedly higher than Big Slope 1 and 2; Big Slope-3 also logged the highest gas concentrations hit at Nomgon yet, with the well “recording a peak of 9.2 cubic metres per tonne (on a raw gas basis.)”
One thing eager shareholders would be wise to note is Elixir’s honest assessment of its operating environment, with the harsh terrain of the Mongolian Gobi introducing “mechanical and geological” issues.
To this end, the company is sourcing a more heavy duty rig to plug away at the tough earth underfoot.
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