LNG News Editor:
Australian company Elixir Energy, whose main asset is its 100 percent-owned Nomgon IX coal-seam gas production sharing contract in the South Gobi region of Mongolia with possibilities for LNG production for fuel or pipeline supplies for power, has updated its operational plans.
The company said it had recently finished drilling the Bulag-Suuj-1S exploration well on the Nomgon region located near Mongolia’s southern border with China.
Potential
“This well logged 21 metres of coal. This discovery has opened up a potential new CSG bearing sub-basin in the PSC area,” stated Elixir.
An appraisal well, Bulag-Suuj-2S, is now following up on this discovery well, at a location some four kilometres away and a second rig has now been deployed by drilling contractor Top Diamond Drilling LLC.
Elixir added that the 2022 2D seismic acquisition programme has been successfully completed, on time and on budget, with 322 kilometres acquired.
“The data obtained is currently being processed and interpreted and will feed into the Company’s future drilling plans,” said the company.
The company’s extended pilot production programme is advancing in parallel to the exploration and appraisal drilling.
“Experienced Mongolian contractor Monbag LLC has been hired to construct the civil works and this will commence shortly,” said Elixir.
“The spudding of the first of the two production wells by drilling sub-contractor Major Drilling is expected by around the end of August 2022,” it added.
Elixir’s Managing Director Neil Young said that as the Mongolian summer advanced operational efforts were moving into top gear.
“We now have three rigs working in our PSC, pursuing a range of exploration and appraisal targets,” said Young.
“A fourth rig will join the programme shortly as we move to start up our extended pilot production test,” he explained.
Elixir commenced Mongolia’s CSG exploration in 2019 and since then it says all the geological ingredients required for success have been confirmed.
“Exploration has been highly capital efficient, the indigenous service sector has expanded and other small-cap operators have entered the market,” it added in a recent presentation where it drew parallels with the Australian state of Queensland’s emergence as a major LNG supplier to Asia.
Queensland history
The company believes the history of Queensland CSG-to-LNG experience could be repeated in Mongolia.
Elixer said the coal thickness was “exceptional in places” in Mongolia at 50-90 metres compared with a maximum of 30 metres in Queensland.
The company said it had a “highly experienced” CSG team which it has taken from Australia to Mongolia.
“Mongolia needs new pipeline infrastructure, but costing $100 million not $10 billion,” it said.
It added that the gas content in the Mongolian CSG is 5 to 15 cubic metres versus 7-14 cubic metres in production areas in the Australian state.
Elixir noted that cost of capital was generally lower in Australia, but for Chinese national oil companies Mongolia is seen as a low sovereign risk.
