Elixir Energy Ltd, the Australian-listed exploration and production company, has provided an update on the extended pilot production project underway in its 100-percent owned Nomgon coalbed methane (CBM) production sharing contract in the South Gobi Basin of south Mongolia near the Chinese border.
Elixir said that the Bluebill-1S exploration well has been the first drilled in the 2023 exploration drilling campaign.
The well is situated 18 kilometres (11 miles) East of the Nomgon Pilot Production Plant.
“Operations at the Nomgon extended pilot test continue. Water flow-rates at Nomgon remain steady at 130 barrels per day,” Elixir explained in its report filed with the Australian Securities Exchange.
“Gas flow rates are currently variable as we experiment with choke size, casing pressure and fluid level to optimise coal depressurisation,” added Adelaide-based Elixir.
“A location for an additional pilot well has been identified and the relevant environmental and other approvals are being pursued,” it said.
The company also owns gas assets in Queensland which pioneered LNG production from CBM, known in Australia as coal-seam gas (CSG).
Fuel potential
Analysts note that the Elixir project could at some stage add small-scale liquefaction for future production of LNG fuel with a nearby customer base of a major road for fleets of heavy-duty trucks delivering Mongolian coal to China.
“The appraisal drilling campaign planned at Big Slope and Yangir is due to commence shortly, with both Major Drilling and Erdenes Drilling assisting Elixir in this program,” Elixir said.
“The company’s previously announced nine-well CBM drilling campaign for 2023 and accordingly remains on track,” it added.
“At Elixir’s direction, drilling contractors have significantly improved their drilling capability for the 2023 program, with all rigs now incorporating enclosed mud systems which should assist in increasing penetration rates and stabilising the holes,” Elixir stated.
Elixir’s Managing Director, Neil Young, said he was pleased to commence the exploration drilling campaign in what are now “excellent” weather conditions and appraisal drilling would also start soon.
“Later this year we aim to also see the company’s operations add drilling in Australia for the first time. We are very much looking forward to the multiple sources of potentially very positive news flowing from all of these activities,” stated Young.
Elixir also has contingent resources booked in the Grandis Gas Project in Queensland.
