TMK Energy Shatters Gas Production Records in Mongolia
TMK Energy has achieved a significant new gas production record at its Pilot Well project, a key component of its Gurvantes XXXV coal seam gas (CSG) venture in southern Mongolia. This latest achievement represents a substantial leap forward, surpassing previous daily output figures and signalling strong momentum for the company.
The standout performer, well LF-07, has seen its production numbers skyrocket, experiencing a near 400 per cent increase in recent months and a remarkable nine-fold surge since August of last year. This exceptional performance has propelled the project to new heights.
In recent days, the company logged a new daily gas record exceeding 900 cubic metres, which translates to over 31,800 standard cubic feet per day (scfd). This impressive figure comfortably eclipses the project’s previous best daily output of 25,000 scfd, demonstrating the rapid and consistent growth in gas volumes. Gas extraction, largely driven by LF-07, has been climbing week on week. For instance, production in the first week of March averaged 873 cubic metres per day.
The most recent production figures from the Pilot Well project show a substantial 50 per cent increase compared to February’s daily gas rate. This uplift is a clear indicator of the project’s burgeoning potential, especially as more water is continuously extracted from deeper wells within the geological structure. Water production has remained relatively stable, averaging around 500 barrels per day.
Excitement Builds as Production Accelerates
Dougal Ferguson, TMK Energy’s Chief Executive Officer, expressed his enthusiasm, stating, “Our cautious optimism has turned to high levels of excitement in recent weeks as we continue to see this week-by-week acceleration of gas production rates. Our expectation is for the gas rates to continue to materially increase from the Pilot Well project over the coming months as LF-07 and other wells reach critical desorption pressure and gas begins to be liberated from the coals at ever increasing rates.”
Ferguson highlighted that the company is on the verge of a major milestone: producing the first-ever commercial coal seam gas in Mongolia.
While February’s average daily gas production of 583 cubic metres was a slight dip from January’s figure of 593 cubic metres, this was attributed to pressure build-up tests conducted on wells LF-01 and LF-04. Both wells were temporarily shut in for testing purposes – LF-01 for 14 days and LF-04 for 7 days. These pressure tests are crucial, providing invaluable data on the reservoir pressure reduction rate, a phenomenon known as desorption. This rate is a key indicator for the project’s long-term success.
TMK Energy believes that the desorption pressure is drawing nearer to the level required for a significant increase in gas volumes. The recent surge in gas production strongly supports this theory.
Last year’s reservoir modelling had already outlined a clear pathway to achieving the optimal pressure. The ongoing water production, averaging close to 500 barrels per day, plays a vital role in depressurising the reservoir. This process lowers the reservoir pressure, thereby facilitating the desorption of gas from the coal seams.
Paving the Way for Commercialisation
The enhanced gas flow rates are expected to bolster discussions with potential gas or power off-takers for the company’s planned first gas-fired generator project. This includes the potential revival of a binding Memorandum of Understanding (MOU) that was initially signed with German power plant manufacturer Jens Energie approximately 12 months ago.
Under the terms of the original MOU, TMK Energy would commit to supplying gas from its Gurvantes XXXV project, initially at a rate of 5000 cubic metres per day. Jens Energie would then convert this gas into electricity for the local market, utilising a German-imported gas-fired power plant to be installed as part of the agreement.
The company is not solely focused on proving gas production capabilities. Plans are in motion to connect the pilot wells and utilise the generated gas to produce on-site power. Any surplus electricity generated could be sold into the local grid, providing an early revenue stream.
The Pilot Well project itself encompasses 60 square kilometres within the Nariin Sukhait area of Mongolia’s expansive landscape. It holds a contingent resource (2C) of 1214 billion cubic feet (BCF) of natural gas, making it the largest gas resource in Mongolia. The broader project area, spanning 8400 square kilometres, currently boasts a prospective resource of 5300BCF.
Mongolia is actively pursuing a transition towards cleaner energy production. The nation is looking to move away from traditional energy sources like coal and embrace cleaner alternatives such as coal seam gas, which burns more cleanly than other fossil fuels.
The recent news of TMK Energy’s significant surge in gas production was well-received by the share market. The company’s share price peaked at 16.5 cents today, marking a solid 26.9 per cent gain for the day. If TMK Energy continues to set new daily gas records, the market is likely to maintain a close watch on its progress.
