TMK Energy's Mongolian Gas Project Hits Record High, Boosting Commercial Hopes
TMK Energy has achieved a significant milestone in Mongolia, establishing a new daily gas production record at its Gurvantes XXXV coal seam gas project. This development marks the clearest indication yet that the pilot operation is progressing toward commercial viability.
The company reported that gas rates have surged to over 25,000 standard cubic feet per day, equivalent to 720 cubic metres. Gas flows are accelerating, showing an increase of nearly 7 percent from the previous record of 674 cubic metres set earlier this month and a 21 percent rise above the January average.
Overcoming Temporary Setbacks
This record follows a brief production dip earlier in the month when TMK temporarily shut down two wells for pressure build-up testing. This routine and critical step in coal seam gas development confirmed that reservoir pressure is declining as expected, a key factor for gas to desorb from coal seams and flow more freely.
TMK believes a small section of the project has begun releasing gas naturally, suggesting a shift toward sustained production. As water removal continues and pressures drop, the company anticipates gas flow will expand across a larger area of the structure.
LF-07 Well Emerges as Top Performer
The standout performer is the LF-07 well, which has surged past 13,000 standard cubic feet per day in recent days and continues to trend upward, making it the strongest well in the field to date. Positioned high in the geological structure, LF-07 is favourably placed as pressure drawdown progresses across the pilot area.
TMK Energy Chief Executive Officer Dougal Ferguson noted that LF-07 is the most recently drilled well and the only one where the fluid level was maintained above the coal seam, potentially limiting reservoir damage by avoiding exposure to atmospheric pressure.
Stability Across the Pilot Wells
While LF-07 has captured attention, gas and water production from the other pilot wells remain stable and predictable, aligning with the company's understanding of coal and reservoir properties as operations scale up.
Reviving Commercial Agreements and Future Plans
The rising gas flow rates have bolstered TMK's confidence in reviving a binding memorandum of understanding with German power plant manufacturer Jens Energie, signed twelve months ago. Under this agreement, TMK would supply gas from the Gurvantes XXXV project at an initial rate of 5,000 cubic metres, with Jens converting it into electricity for the local market using an imported gas-fired power plant.
With the likelihood of a successful deal increasing, TMK is looking beyond merely proving gas production capabilities. The company plans to connect the pilot wells to generate on-site power, with surplus electricity potentially sold into the local grid as an early revenue stream.
Benefits for Mongolia and Market Response
Saleable gas would significantly enhance Mongolia's domestic energy security, aligning with national goals for a locally supplied, scalable gas project. For TMK, the rising production opens new opportunities as it advances into the next development phase, engaging with regulators and potential buyers.
The market has responded positively, with TMK's share price rising up to 29 percent to 12.5 cents on the latest news. If the LF-07 well's performance can be sustained and replicated across additional wells, the Gurvantes XXXV pilot could transition from a technical proof-of-concept to a compelling commercial gas venture in Mongolia.
