LNG

Elixir Energy Ltd, the Australian exploration and production company with coal-seam gas interests in the Gobi Basin of Mongolia, is also making progress with assets in the Australian state of Queensland where it signed a data-sharing agreement with LNG operator Santos for the Bowen Basin.

“The company has entered a data-sharing agreement with oil and gas giant Santos covering planned wells in neighbouring permits in the Taroom Trough of Queensland’s Bowen Basin,” said Elixir.

Elixir’s agreement with a Santos group company is in connection with Elixir’s 100-percent-owned Grandis Gas Project for petroleum lease ATP 2044 located in the basin.

“It provides for Elixir and Santos to exchange technical data on planned wells in the neighbouring ATP 2044 (Elixir) and ATP 2056 (Santos) exploration permits in the Taroom Trough,” a statement added.

The Elixir-Santos agreement also provides a mechanism to establish a forum for technical discussions about the deep plays in the Taroom Trough.

LNG operations

Adelaide-based Santos is the operator of the Gladstone coal-seam-gas-to-LNG plant in Queensland and runs the Darwin LNG facility in the Northern Territory. It is also a significant shareholder in Papua New Guinea LNG and the expansion project.

“We are naturally very pleased to enter into this agreement with a company of the size and quality of Santos, who is a neighbour on multiple sides of our Grandis Project,” explained Elixir’s Managing Director Neil Young.

“The enormous potential of the known and extensive gas resources in the Taroom Trough will have a greater chance of being realized through such cooperative efforts. We look forward to working with Santos in the years ahead to develop this play,” Young stated.

Elixir recently provided an update on its activities in its 100-percent owned Nomgon IX coal-seam gas production sharing contract in the South Gobi Basin of Mongolia.

“Recent coring, desorption and testing at the Big Slope coal deposits have formally yielded a gas discovery under Petroleum Resources Management System (PRMS) guidelines, having proved the presence of gas saturated coal with adequate permeability,” said Elixir.

The company said a total of 3,510 metres has now been drilled in the Big Slope area with a total of 259 metres of coal intersected.

“Elixir has measured consistent gas contents of up to 9 cubic metres per ton (on a raw gas basis) - with the expected strong correlation of increasing gas content with depth,” it added.

The company noted that the well completed most recently, Big Slope Shallow-1, intersected 37 metres of coal in a well that was 321 metres deep.

Shares purchase

Elixir, which has offices in Adelaide and in Ulaan Bataar in Mongolia, has also just launched a share purchase plan (SPP) to raise up to A$3.5 million (US$2.24M) on the same terms as a recently announced share placement.

“The board is pleased to offer existing eligible shareholders an opportunity to participate in this SPP,” said the company.

“The SPP will give all eligible shareholders an opportunity to apply for up to $30,000 worth of new shares at an issue price of A$0.07 cents per SPP share,” it added.

“For each two new shares acquired, the company will issue one free attaching listed option, exercisable at 12 cents and with a term of three years, (SPP Options),” Elixir explained.

The SPP is intended to raise A$3.5M with an ability to take an additional A$2M at the board’s discretion.

Australian company Elixir Energy is proceeding with appraisal drilling at the Grandis Gas Project in Queensland, located close to the Wallumbilla gas hub and main infrastructure connections to liquefied natural gas export plants and also gave an update on its coal-seam gas exploration in Mongolia.

Elixir has said that government agencies such as the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Operator (AEMO) had recently noted a rapidly emerging shortfall between gas demand and supply on the East Coast.

“The new policy does not change demand - but arguably does reduce supply options,” said Elixir, which is listed on the Australian Securities Exchange.

“Advantaged projects such as Grandis are, therefore, placed in an even stronger competitive position,” said the company.

Elixir’s Managing Director Neil Young said he was confident that the Grandis Gas Project has underlying advantages already in place.

Low-risk play

“We've picked up here a very low-risk play in terms of drilling an appraisal well in a location that is advantaged now from a global gas market perspective,” said Young whose company owns 100 percent of the licence.

“The Queensland well can be the most impactful well the company has drilled in this nearly 20 years of being listed on the ASX,” Young added.

“In the location we can access international LNG prices too. A stimulation programme which will follow early in the New Year and then that will take a month or so and then we'll get flows at the end of that,” added Young.

He said that there would be further news coming through as the company passed various stages in the drilling campaign and conducted other activities lasting into the New Year of 2024 because of the depth of the well.

“In Queensland it's going to take a while to get down to the depths,” Young explained.

BG-Shell activities

“This is an appraisal well near where BG Group, later Shell, drilled and spent a few A$100 million about 10 years ago and most of the data from that programme became public as is the case in countries like Australia and we use that data in the proximity to our permits,” he said.

“The contingent resource will actually be near infrastructure and the assets are located about 50 kilometres from what's called the Wallumbilla gas hub, which is both a physical and a market-based trading hub and connects this asset potentially to markets across Queensland and also to Australia’s southeast states of Victoria and NSW,” he added.

“There are also a number of pipelines going Northeast to the LNG plants in the Port of Gladstone which can currently supply East Asian markets but which have declining resources of their own from their foundation assets so there's a wealth of optionality here to target some domestic markets across Australia and also international markets,” Young said.

Young went on to acknowledge that the Nomgon coal-bed methane (CBM) project in the South Gobi Basin of Mongolia had not yielded expected results in terms of flow rates, though the drilling campaign was continuing with new operations.

“The Big Slope-7 appraisal well spudded just over a week ago and has already intersected gaseous coal,” said Young on Elixir’s 100 percent-owned Nomgon IX project.

“The well is now undergoing Injectivity Fall Off Testing (IFOT) to measure permeability in this upper coal section. Big Slope 7 is situated west of the Big Slope-4 well drilled in 2022 and has a planned total depth (TD) of 800 metres,” Young explained.

Mongolia contractor

The well is being drilled by the Mongolian contractor Erdene Drilling LLC and is the first of a number of wells Erdene is contracted to Elixir for drilling in the region.

Elixir added that exploration was also progressing at Bluebill-1. That well has intersected gaseous coal and drilling was ongoing.

“It is a pleasure this year to be working with Erdene Drilling again - they were pioneer drilling contractors with us from 2019 to 2021 - but took a break from CBM work for a year after that,” said Young.

“We look forward to the results of the appraisal drilling program over the coming months. Drilling results from both wells underway are encouraging - and if successful could open up significant new areas to the East and West of Nomgon,” he added.

“Last month Elixir also engaged the services of the THREE60 Energy Group to assist with the production management of the pilot and to boost the company’s drilling support,” Young concluded.

Elixir Energy Ltd, the Australian-listed exploration and production company, said it aimed to demonstrate early in the New Year a commercial flow-rate from its pilot Nomgon coalbed methane (CBM) project located in the south of Mongolia near the Chinese border.