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TMK Energy moves closer to pivotal Mongolian gas drilling

TMK Energy is ticking the boxes needed to start drilling at its Gurvantes XXXV coal seam gas project in Mongolia. Credit: File

TMK Energy (ASX: TMK) is nearing a pivotal drilling program at its giant Gurvantes XXXV coal seam gas project in Mongolia after securing all regulatory approvals for its 2024 campaign.

The company has today confirmed that relevant long lead items have been ordered for the drilling of production wells at the existing 1.2 trillion cubic feet (TCF) resource, with the work scheduled to begin in August.

Management noted that the procurement and logistics process has been thoroughly considered to ensure the necessary equipment is on site and ready to go prior to the start of drilling. The relevant equipment has been sourced from an array of countries including Australia, Canada and China.

The tender process to secure a contractor for drilling and affiliated services has also come to an end after a multi-month evaluation period. Several candidates submitted bids and management will now gauge the merits of the tenders according to a core set of criteria involving cost, timing and the level of expertise, as well as health, safety, environmental and social factors.

More broadly, TMK is set for a boost in activity levels at Gurvantes, with the upcoming drilling campaign marking the start of a broadened workflow after the company recently secured a five-year environmental approval for up to 45 production wells and 95 exploration wells.

To date, the company has been running a three-well pilot program consisting of the Lucky Fox-1, 2 and 3 production wells. The wells are pumping down the reservoir pressure in an effort to hit critical desorption pressure, at which point gas flow rates to surface are expected to increase.

According to TMK, the three Lucky Fox pilot wells continue to produce water and gas and experience high uptime, while adhering to strict operational requirements, in addition to health, safety, environmental and social obligations. The company’s immediate focus remains on drilling additional production wells to accelerate the continued depressurisation of the reservoir and to demonstrate that gas can flow to surface at commercial rates in the short-to-medium term.

Management recently conducted a site visit to Gurvantes and held a series of meetings in Mongolia’s capital city of Ulaanbaatar. It helped reinforce the company’s views that the project hosts “enormous potential” to provide a cleaner and more reliable energy source than the coal-reliant alternatives available in Mongolia.

Our recent visit to Mongolia again confirmed that there is real demand for a source of domestically-produced natural gas in Mongolia, with energy security and reliability key drivers. Cleaner, affordable energy is of huge significance to the Mongolian economy, its people and the Government.
TMK Energy interim CEO Dougal Ferguson

Ferguson said the company was striving to be the first in Mongolia to demonstrate the ability to produce commercial quantities of natural gas and commercialise already significant discovered resources. He also said independent advice from multiple industry experts is aligned with TMK’s internal assessment for the design of the 2024 work program.

More specifically, that is expected to include the drilling of the additional production wells to accelerate the depressurisation of the reservoir and to target significantly higher gas production rates from the consistent, but relatively low rates currently being churned out

According to the company, Gurvantes is one of the most advanced gas appraisal projects in Mongolia, with the potential to produce enough gas to satisfy the immediate and growing demand for energy in the country.

It could also tap into adjacent markets such as China as the project expands into full-scale gas development. Gurvantes lies just 300km north of China’s main east-west gas pipeline, creating access to what is one of the world’s biggest gas markets.

With all of its approvals now in place, TMK could be in for a transformational second half of the year. The regulatory green light at Gurvantes seems to pave the way for the company to advance one of Mongolia’s most significant gas resources just when the Asian nation is seeking to shore up its energy supply.

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