Elixir Energy Ltd (ASX:EXR) has revealed an expansion of the Nomgon Pilot Project underway at the Nomgon IX Coal Bed Methane (CBM) Production Sharing Contract (PSC) in the South Gobi Basin of Mongolia.
As part of the expansion plan for the pilot production project, the company will extend the flow period and drill an additional pilot well.
This comes as the company believes the commercial potential for CBM in Mongolia is significant due to comparatively much lower drilling costs and access to gas prices that reflect the East Asian region as an LNG importer rather than an exporter.
Elixir's strong view is that the commerciality of CBM in the Mongolian context has material advantages over the likes of Australia.
“Strong regional combination”
Elixir managing director Neil Young said: “We are pleased to announce an expansion of the Nomgon Pilot Project.
“Our strategy to invest in Mongolian CBM rests on the strong regional combination of high gas prices and low costs and the results to date are highly encouraging in this context.”
Workover completed
Elixir completed the workover of the two-well pilot project at Nomgon IX in early April 2023. This involved the existing completions being removed, cleaned out and replaced.
Smaller pumps, which are more suited to the actual water flow rates, were installed.
The pumps and associated gauges were placed lower in the wellbore to allow for the fluid levels to be lowered to below the level of the coal seam.
The Nomgon-9 well has successfully been brought back into production, with various experiments being conducted to control rates, which have ranged up to 76,000 standard cubic feet per day, whilst monitoring the back pressure and fluid level in the well.
Water flow rates have remained stable in the last few weeks at ~105 barrels of water per day, which is a strong indicator of increased desorbed gas flows emerging in the future.
Forward plan
A new pilot well, Nomgon-10, is now planned to add to the data set to be gained from the Nomgon Pilot Project.
Elixir is evaluating the optimal drilling contractor selection for this well in the context of its other drilling plans for 2023.
Meanwhile, the company’s 2023 exploration drilling campaign is due to start shortly.
Mongolian-owned and operated Top Diamond Drilling LLC is the successful tenderer for the company’s five-well exploration program.
The 2023 exploration drilling program will kick off once certain regulatory processes have been closed out in a week.
The formal regulatory process for the preferred tenderer for the company’s 2023 appraisal program is also nearing completion.