LNG

Sept 29 (LNGJ) - Elixir Energy of Australia was positive about future coal-bed methane (CBM) gas production prospects in Mongolia, bordered by China and Russia. Elixir Managing Director Neil Young said the company’s Nomgon-10 pilot well is now online at its Nomgon IX CBM project in the South Gobi Basin of Mongolia.

   Young said that Elixir was bringing the well into production slowly to minimise the risks of formation damage and shocks to the coal reservoir. “In the Yangir region, a successful drill stem test (DST) was performed on the Yangir West-2 well, with the results constituting a CBM gas discovery and with the company having proved the presence of gas-saturated coal with adequate permeability,” Elixir added. The company also has LNG production ambitions in Australia.

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.

Origin Energy, the Australian utility and shareholder with China’s Sinopec and ConocoPhillips in the Australia-Pacific LNG plant in Queensland, said revenues dropped during the quarter, driven by lower realised prices for long-term LNG and it was cutting back on coal-seam feed-gas output because of subdued demand.

Australian liquefied natural gas plant operator Santos reports progress on a coal-seam gas project in northwest New South Wales with up to 850 wells and which the Adelaide-based company said would be less expensive than LNG imports to meet gas shortages.

Australia Pacific LNG’s acquisition of the Ironbark coal-seam gas project in Queensland from Origin Energy has been approved by the country’s regulators who do not see the deal affecting East Coast domestic natural gas supply.

Santos, the shareholder in two Australian liquefied natural gas LNG export plants and in Papua New Guinea LNG, has priced a US$600 million fixed-rate bond and said the transaction was many times over-subscribed with demand from global financial institutions.

The bonds have been priced at a fixed coupon of 5.25 percent for a period of 10 years and maturing on 13 March 2029. The bonds will be guaranteed by Adelaide-based parent company Santos Ltd.

“The book was approximately five times over-subscribed and received strong support from a mix of global asset managers and insurance companies from Asia, Australia and Europe,” said Santos.

The use of the proceeds from the bonds will include refinancing the US$500M bridging facility used to partly-fund the acquisition by Santos of Western Australian natural gas and oil company Quadrant Energy and for general corporate purposes.

Santos Chief Executive Kevin Gallagher said the offering was consistent with the company’s strategy of securing competitively priced long-term capital.

“This is an excellent result for Santos, showing strong support from the capital markets and demonstrating our balance sheet is set up to support our growth strategy,” added the CEO.

He explained that the bond would replace an existing two-year bridging facility and would mean that all significant near-term debt maturities have been addressed with more efficient long-term debt funding.

Santos is operator of the Gladstone LNG plant in Queensland and whose other shareholders are Petronas of Malaysia, Korea Gas Corp. and French major Total.

The company also holds a stake in Darwin LNG, operated by ConocoPhillips, and in the ExxonMobil-led PNG LNG plant and its expansion project.

Santos said joint lead managers of the transaction were Australia and New Zealand Banking Group ANZ, Citigroup Inc. of the US and Commonwealth Bank of Australia.

Australian natural gas and oil production set new records in the third quarter and almost took the country to a run rate of one billion barrels of oil equivalent per annum, led by LNG output in Western Australia and the coming on stream of the Ichthys plant in the Northern Territory.

Royal Dutch Shell and Santos, the operators of two LNG export plants in eastern Australia, Queensland Curtis LNG and Gladstone LNG, plan to work in partnership on new coal-seam gas acreage in the Surat and Bowen Basins.

Origin Energy, a stakeholder in the Australia Pacific LNG plant in Queensland, said the facility shipped more cargoes during the Sydney-based company’s fiscal year as its integrated gas business surged because of higher LNG revenues.

Gladstone LNG, one of three coal-seam-gas to-LNG plants built on Curtis Island in the Australian state of Queensland over the past three years, has delivered its 200th cargo.