TMK Energy Achieves Groundbreaking Gas Production Milestone in Mongolia
TMK Energy has set a remarkable new daily gas production record at its Pilot Well project, located within the Gurvantes XXXV coal seam gas initiative in southern Mongolia. This achievement marks a significant leap forward for the company, with production numbers soaring to unprecedented levels.
Record-Breaking Performance from Well LF-07
The standout performer in this surge is well LF-07, which has experienced a dramatic increase in output. Over the past few months, production from LF-07 has surged by nearly 400 percent, with a nine-fold rise since August of last year. This well, drilled as the seventh in the series, has become the cornerstone of TMK's success in the region.
In recent days, the company reported a new daily gas record exceeding 900 cubic meters, equivalent to more than 31,800 standard cubic feet per day (scfd). This figure far surpasses the previous best of 25,000 scfd, highlighting the rapid acceleration in gas extraction efforts.
Steady Growth and Project Potential
Gas production has been consistently climbing week by week, with an average of 873 cubic meters per day recorded in the first week of March. This represents a substantial 50 percent increase over February's daily rates, underscoring the immense potential of the Pilot Well project as water is continuously pumped from deeper wells.
Water production remains stable at approximately 500 barrels per day, aiding in the depressurization of the reservoir. This process is crucial for reaching the desorption pressure needed to liberate gas from coal seams at increasing rates.
Strategic Plans and Future Outlook
TMK Energy plans to drill additional wells similar to LF-07 to further boost gas output in the short term, with new locations already identified. The company's chief executive officer, Dougal Ferguson, expressed high levels of excitement, noting that gas rates are expected to continue rising significantly in the coming months.
"Our cautious optimism has turned to high levels of excitement in recent weeks as we continue to see this week-by-week acceleration of gas production rates," Ferguson stated. "Our expectation is for the gas rates to continue to materially increase from the Pilot Well project over the coming months as LF-07 and other wells reach critical desorption pressure."
Commercial Prospects and Market Impact
TMK is on the verge of a major milestone, aiming to produce the first commercial coal seam gas in Mongolia. The increased gas flow rates could support discussions with potential off-takers for gas or power projects, including reviving a binding memorandum of understanding with German power plant manufacturer Jens Energie.
This agreement would involve TMK supplying gas at an initial rate of 5,000 cubic meters, with Jens converting it into electricity for the local market using imported gas-fired power plants. Beyond proving gas production capabilities, TMK plans to link pilot wells to generate on-site power, with surplus potentially sold into the local grid for early revenue.
Project Scope and Environmental Context
The Pilot Well project spans 60 square kilometers in the Nariin Sukhait area and holds a contingent resource of 1,214 billion cubic feet of natural gas, making it Mongolia's largest gas resource. Across its total 8,400-square-kilometer ground, the project has a prospective resource of 5,300 billion cubic feet.
Mongolia is actively transitioning to cleaner energy sources, moving away from traditional coal to options like coal seam gas, which burns cleaner than other fossil fuels. This shift aligns with global trends towards sustainable energy production.
Market Reaction and Investor Interest
The sharemarket responded positively to the news, with TMK's stock price peaking at 16.5 cents, marking a 26.9 percent gain. As daily gas records continue to climb, investors are likely to keep a close watch on the company's progress, anticipating further growth and commercial opportunities in Mongolia's energy sector.
