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Murray Ward
TMK Energy has locked in contractor Major Drilling to kick off a new work program at its Gurvantes XXXV coal seam gas project in Mongolia, as it looks to chase a major lift in gas flows and demonstrate the commercial chops of its independently certified 1.2 trillion cubic feet of gas contingent resource.
Notably, the resource figure is derived from just 60 square kilometres of the project’s sprawling 8400-square-kilometre tenure, suggesting the true potential remains uncharted. The company has flagged a prospective resource of 5.3 trillion cubic feet across the broader Mongolian South Gobi basin.
The company has committed to drilling at least one new pilot production well, LF-08, and will also re-complete three of its seven existing wells in a bid to ramp up gas flows. TMK’s new well is targeting an up-dip location that management believes could make it an early gas producer.
It will be drilled with an optimised wellbore design intended to build on the success of the project’s best-performing well to date, LF-07, the only well delivered under a revised reservoir management plan last year. Final preparations for the new well are underway, with drilling operations expected to kick off in late September.
‘The month-on-month increase in gas production is clear evidence that the coals in our pilot are capable of sustained gas production.’
TMK Energy chief executive officer Dougal Ferguson
In parallel, the company is pushing ahead with the re-completion of three existing production wells – LF-02, LF-03 and LF-06, with work scheduled to start next month. Most of the long-lead items for the re-completions have been manufactured and are now being shipped from China to Mongolia, following the purchase order, with the equipment expected on-site in the coming weeks.
The initial plan had contemplated drilling up to three new wells; however, the company has refined its strategy to focus first on increasing gas production from its existing assets, while retaining the flexibility to drill additional wells under its contract with Major Drilling.
The company says the combination of drilling LF-08 and re-completing three existing wells is expected to meet its 2026 work program commitments for the Gurvantes XXXV licence.
TMK Energy chief executive officer Dougal Ferguson said: “The month-on-month increase in gas production that we report is clear evidence that the coals in our pilot are capable of sustained gas production and that the pressure in the reservoir continues to decline. These key facts, together with continued good water production rates are the key ingredients of a successful coal seam gas project.”
The company’s latest operations update shows average gas production during July climbed 5 per cent from the previous month to about 27,500 standard cubic feet per day (scfd). The upward trend has continued into August, with daily production now averaging more than 28,250scfd and edging closer to the company’s next operational milestone of producing more than 30,000scfd.
Alongside rising production, TMK and its local partner, Dashvaanjil Group, have completed engineering and design work for the company’s gas-to-power project. Subject to commercial agreements being finalised and a planned October final investment decision, the project is expected to be operational by December. It would provide the company with an early pathway to cashflow by converting its own gas into electricity for remote mining operations that currently rely on diesel or third-party power.
The Gurvantes XXXV project is strategically located in Mongolia’s South Gobi Desert, less than 20km from the Chinese border and close to existing gas infrastructure in northern China. For an aspiring gas producer, having the world’s largest energy market just a stone’s throw away is a serious commercial advantage.
With a drilling contractor now locked in and equipment heading to site, TMK appears to be rounding the corner on its pilot program. The focus is now on execution, with the rods set to start turning next month as the company works to prove it can deliver commercial quantities of gas from its giant Mongolian resource.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
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