TMK hits another 60m Mongolian coal seam in second hole

TMK Energy has completed the second of a three-hole pilot production well program at its Lucky Fox site, part of the company’s wider Gurvantes XXXV coal seam gas project in Mongolia, encountering a second 60m zone of net coal.

Management says intersecting the upper coal seam in the second hole was expected and consistent with the first hole recently drilled and three additional existing pilot wells. The second hole has now been cased to a depth of 475m and drilling of the third-hole is now imminent.

The company’s objective from the program is to produce commercial rates of gas from the upper coal seam at the project that sits in the rugged Asian country. TMK now plans to gather a multitude of data from the seam’s thick zones, using modern distributed-temperature-sensing (DTS) technology.

It intends to install downhole pumps shortly at its two drilled holes and then move the drill-rig to the planned third hole.

Upon completing the final hole, it will begin commissioning of the wells with production scheduled for late November.

Having two wells now successfully drilled is yet another major de-risking event accomplished. With six pilot production wells all producing in close proximity to each other, we are confident of being able to reach the critical desorption pressure required and deliver increased gas flows in our stated timeframe.

The company expects the three additional wells to provide the extra pumping capacity required to reach critical desorption pressures faster and expedite a significant uplift in gas production rates at the pilot well area within a shorter timeframe than would otherwise occur.

Management believes it has discovered a “world-class” coal seam gas resource in Mongolia, comprising superior technical attributes to many of its peers’ existing developed projects.

The contingent resource (2C) of 1214 billion cubic feet (BCF) of natural gas is Mongolia’s biggest according to TMK and falls within its core Nariin Sukhait area consisting of 60 square kilometres.

TMK believes it possesses significant exploration upside potential outside its core area, with a 5300 BCF prospective resource across its total 8400-square-kilometre ground.

Coal seam gas is considered a “clean transition fuel” because it produces about half the carbon emissions produced by coal-generated electricity and burns cleaner than other fossil fuels.

The company’s Gurvantes project is well placed and sits less than 20km from the Chinese border and close to existing gas infrastructure in northern China, such as the West-East Gas Pipeline.

It potentially presents a huge opportunity to supply China’s mammoth energy market, in addition to Mongolia’s gas-hungry domestic market.

With the likelihood of increased gas resources from the coal seam encountered in the latest drilling, coupled with an uplift in production from the desorption benefits, the company may be “sitting pretty” with its proximity to the large Chinese projects.

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