TMK readies three new wells for Mongolian gas production

Rapidly growing gas producer, TMK Energy has completed downhole activities on three new pilots wells, doubling production capacity at its Lucky Fox pilot well site, part of the company’s Gurvantes XXXV coal seam gas project in Mongolia’s South Gobi Desert.

The three new wells were drilled to a depth of 480m in October and struck paydirt after hitting a 60m coal seam.

While downhole production tubing, rods, pumps and temperature sensing fibre optic cable have been successfully installed in the first two wells, the final well is in the last stages of preparation for commissioning, expected by the end of the month.

The company is also in the process of installing all the necessary electrical connections, water lines and pre-assembled “metering skids”- used for raw gas flow measurement – which will allow the new wells to connect with the existing surface processing facilities.

Once commissioned, the three new wells - LF-04, LF-05 and LF-06- will double the production capacity of the two-square-kilometre pilot well complex and will complement the already operational LF-01, LF-02 and LF-03 wells.

Management says the new wells will be slowly brought into production for standard safety reasons and in line with the company’s overall reservoir management plan.

Assuming everything goes to plan the pumps will be at full pumping capacity by the end of January after which TMK will be able to start measuring the pressure drop off in flow rates.

Pressure monitoring is critical to achieving the correct desorption rate to optimise gas production. By not drawing down on the gas too quickly, the company can reduce the risk of the well running dry too quickly, thereby extending its life.

We remain on track to have six pilot production wells online by the end of November, which will double the pumping capacity as we continue to strive towards our goal of becoming the first commercial producer of natural gas in Mongolia.

TMK’s sees the future of its coal seam project as a regionally significant, reliable source of natural gas for both Mongolia’s domestic market and the regional energy infrastructure.

With a contingent (2C) resource of 1.2 trillion cubic feet (Tcf), the company considers Gurvantes XXXV to be Mongolia’s biggest gas deposit and given its proximity to China’s northern gas pipelines it has the potential to be a meaningful contributor towards the region’s eventual transition away from coal.

Further exploration upside potential also exists immediately outside the Lucky Fox pilot well area with an estimated 5.3Tcf prospective resource sitting across its 8400-square-kilometre lease.

The timing and rapid progress of TMK’s imminent path to production would certainly please the company’s management, who, just 12 months ago picked up the remaining 33 per cent balance of the project from ASX-Listed Talon Energy.

In a deal which saw roughly 10 per cent of TMK, or one billion new shares, offered as an in-specie distribution to Talon shareholders and a further 90 million shares retained on the Talon books, TMK can now look forward to receiving 100 per cent of the cashflow which will start to pour in starting from the end of January.

That revenue stream may then provide the necessary capital to drill more wells and continue expanding the vast resource at a time when gas, seen as a “clean transition fuel” is only likely to get stronger, especially in neighbouring China.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au