Green light for ASX-listed explorer’s coal-seam gas project

Regulatory and environmental permits are in place and site preparations are in the final stages at TMK Energy’s (ASX: TMK) Gurvantes XXXV CSG Project in the South Gobi Basin, Mongolia.

The site, which is located within the Nariin Sukhait area, is also ready to receive the drilling rig. This was contracted earlier in 2023 from Major Drilling, one of the world’s largest contractors.

Drilling will begin once this is in place, after preparations – including installation of a semi-permanent 40-person capacity camp and drilling pads – are complete.

“It is an exciting stage for the team as the drill rig makes its way to the site after the significant efforts of many during the preparative stages of planning for the commencement of this Pilot Well Program. With commencement now imminent, it signals the start of 8 months of activity on site,” says Brendan Stats, TMK Energy’s CEO.

“The Pilot Well Program represents an important milestone as we aim to flow the first gas to the surface and take our first step toward commercialisation, demonstrating the potential of coal seam gas in the Gurvantes Project.”

The Pilot Well Program

This will consist of three individual production wells, located approximately 200 metres apart and centred on the site of the Snow Leopard 2 (SL-2) exploration well. The process involves:

1. Drilling of the wells, which is expected to take around seven weeks.

2. When these wells are complete, downhole pumps will be installed and surface facilities will be connected – a process that should take approximately four weeks from the completion of drilling.

3. Commissioning of pilot well pumps, followed by the controlled “dewatering” process (the removal of groundwater).

4. First gas breakthrough is anticipated within one or two months after pilot well pumps start operation.

Why this matters

Further to his earlier comments, TMK’s CEO Brendan Stats highlights this work builds on last year’s identification of significant in-ground gas resources. “The pilot well program aims to demonstrate that we can flow gas to surface at attractive commercial rates,” he says. Based on independent modelling from SLB (formerly Schlumberger), TMK expects gas breakthrough to occur “relatively early, then gas flow rate will build over the six month production test.” This production testing is expected to show sufficient gas flow rates for power generation, which will in turn allow this generation capacity to be sold to to coal mining operations – as outlined in the recently signed Cooperation Agreement with the MAK group of companies. According to TMK Management: “This will demonstrate proof of concept and will also be a more environmentally efficient use of the gas produced, as opposed to flaring the gas into the atmosphere.”

What’s next?

TMK continues to progress its planning for gas-fired power generation to utilise produced gas, which will help meet the demand for reliable energy in the area, via its local offtake partner, MAK. According to TMK’s CEO Brendan Stats, “The Pilot Well Program represents an important milestone in the Project development as we aim to flow first gas to surface and take our first step toward commercialisation, demonstrating the potential of coal seam gas in the Gurvantes Project.”

Disclaimer: Market Index helps small-cap ASX-listed companies connect with Australian investors through clear and concise articles on key developments. TMK 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.