Highlights
- Horizontal drilling successfully completed at second gas production well with over 800m of net coal reservoir intersected, resulting in a combined 1,500m of gassy coal
- Both wells are now being equipped for production and are expected to be online and producing within the next 3 to 4 weeks
- Total gas measured in well 2 by the gas detector and observed in the drilling mud encouragingly indicated higher gas levels than was measured in the first production well
- Following the success from the initial two gas production wells, negotiations are underway to provide near term commercialisation opportunities via CNG production capabilities to capture value from the early gas flow.
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Jade Gas Holdings Limited (ASX:JGH) (Jade or the Company) is pleased to announce further, significant progress with recent gas production drilling program activities at the Red Lake gas field in the South Gobi region of Mongolia.
Gas Production Program
Jade has successfully drilled the second lateral coal seam well in Mongolia, whereby, as with the first well1, significant gas readings were recorded on the gas detector and significant visible gas was observed in mud returns from the targeted coal seam IIIb.
The well was drilled to a total depth of 1,507m MD (measured depth) with a lateral section of approximately 902m. Within the lateral section, 802m of net coal was intersected in the target seam IIIb, resulting in 88.9% net coal pay.
Monitoring of mud gas was undertaken during drilling confirming that the target coal seam had better than expected gas shows based on the desorbed gas content in offset core wells Red Lake 7, 15 and 16.
As with the first production well, a 5 1/2 inch pre-drilled liner staged cementing tool and 51/2 inch casing string are being set in the well, with the stage cementing packer located just above the entry point to seam IIIb in the heel of the lateral.
Activities will now focus on completion of these first two wells and production testing. After the pumps and production equipment are installed, the water and gas flow will be analysed and used to continue to refine the planned development operation of the TTCBM field.
Commercialsation Opportunities
Following the success of the initial two gas production wells, Jade expects to complete an agreement with a mid stream manufacturer of fully integrated Compressed Natural Gas (CNG) equipment which will enable the Company to commercialise the gas from these initial wells.
These CNG facilities are easily transportable, and are able to take lightly processed gas and convert into a saleable and marketable form, enabling the Company to potentitally deliever to various markets in the immediate vicinity. These markets are in need of a cleaner and more secure fuel source, including the displacement of diesel which currently powers the large coal haulage truck fleet in the South Gobi.
Commenting on the progress, Jade Executive Chairman, Dennis Morton, said:
“Production drilling results confirm our confidence in the Red Lake Gas Field being a future world class gas producer. We will complete these first two production wells and bring them online as soon as possible. We then eagerly await confirmation of gas flow rates.
The Tavan Tolgoi basin is located within an area with high energy demand for electricity, fuel for engines and as a base load energy supply to underpin intermittent renewables. This is a wonderful situation for the Company as all gas sales options target high energy replacement costs.
We are not too far away from gas production and gas sales in some form. Our gas commercialisation plan is built around a modular and scalable LNG project, but we are also canvassing other, nearer term, and lower capex opportunities in the form of CNG, a product that is also utilised in displacing diesel in coal haulage trucks and which we expect will be under great demand.”
Elton Dong of DWK added,
“When drilling the first production well, and our first well in Mongolia, we took a little more time so as to understand the coal seam during the lateral part of the drilling process. After the success and understanding of the first well, it allowed us to complete the second well quicker.
In addition, this second well outshines the first well with higher gas readings supporting the Company’s desire to quickly commercialise the gas. As with similar wells we have drilled in the Qinshui Basin in China, we will now look to put these two wells into production within the next few weeks and move on to drilling the next wells.”
Link to ASX Release: https://bit.ly/4j8juyX
Investors and Media contact:
Dennis Morton
Executive Chairman
+61 412 995 696
[email protected]
Elvis Jurcevic
Investor Relations
+61 408 268 271
[email protected]