Elixir Energy’s pilot gas plant flow rates stabilising; new exploration areas positive for gassy coals

Tue 20 Dec 22, 10:53am (AEST)
Traditional yurts set up on Mongolian grassland
Source: Unsplash

Key Points

  • Elixir’s pilot plant in the Mongolian Gobi, part of its Nomgon IX CBM project, continues to stabilise flows
  • Due to technicalities of fracking, the company expects to know if it has a commercially viable well by early 2023
  • Exploration at the Big Slope-6 wellsite of foremost interest to exploration team

Elixir Energy (ASX:EXR) on Tuesday revealed its expectations to see stabilised gas flows by early 2023 at its pilot plant at the Mongolia-based Nomgon IX coal bed methane (CBM) project. 

Samples of the pilot plant gas taken so far indicate a 99% methane (i.e. natural gas) concentration. 

Back in November, Elixir officially became the first ASX-listed company to flow gas in the Gobi region, beating out competitor TMK Energy (ASX:TMK) and Talon Energy (ASX:TPD)

The pilot well in question flows from the Nomgon-9 well; Elixir notes that gas and water rates are currently unstabilised, but producing more and more gas. 

In fracking operations, wells will first have stimulation fracture fluid removed before gas begins to come up from the well. In many cases, groundwater will too. 

A “cut” of gas and water will eventually see less and less water return from the hole until eventually the asset is producing straight gas. 

Production will continue into 2023; once gas flows have stabilised, the company will know whether it has an asset with a commercially viable gas flowrate. 

Early 2023 the decider 

“Establishing pilot production at Nomgon has been the key focus for our CBM project in 2022, and stabilised gas flow-rates are expected early in 2023,” Elixir Energy boss Neil Young said. 

“As we complete our field program for 2022, I would like to pay tribute to our Mongolian field and contractor teams, who have delivered this program safely and responsibly.”

“Although Major Drilling started late in the year…our wells at Yangir and Big Slope can now be drilled more quickly and with greater confidence.”

More gassy coals found 

Yangir and Big Slope are the names of the next two target areas Elixir is exploring at Nomgon, with the final two wells of the 11,576m 2022 drilling campaign sunk at the Big Slope target. 

Big Slope-6 was drilled to a depth of 460 metres and intersected 17 metres of gassy coals with impressive early-stage evidence of strong gas concentrations. 

Big Slope-5, meanwhile, reached its total depth of 214 metres, intersecting a 2.4m thick gassy coal system. 

Big Slope-3 and -4 intersected 28 and a whopping 59 metres of gassy coal respectively, but Elixir’s expectations for gas contents at Big Slope-6 remain of foremost interest to the company. 

A look at Elixir's three month charts
A look at Elixir's three month charts
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Elixir Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


Related Tags

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

Get the latest news and insights direct to your inbox

Subscribe free