Elixir Energy Ltd (ASX:EXR) has overcome logistical and supply chain hurdles to remain on schedule to begin the pilot program for the wholly-owned Nomgon IX coal bed methane (CBM) production sharing contract (PSC) in Mongolia.
The program is on-track to spud wells in August this year, with the pilot production program to begin in the latter half of that month. All the required equipment for drilling, completion and testing is now in Mongolia, despite logistical difficulties.
Elixir has engaged Major Drilling Group, a drilling contractor with global operations, to drill the Nomgon 8 and 9 wells, the first two wells for pilot production.
Steps taken to improve regional exploration
“All of our Australian readers have no doubt experienced the current realities of global supply chain disruptions in areas as mundane as airports and at the petrol pump,” Elixir Energy managing director Neil Young said.
“Given the complexities of shipping equipment to Mongolia from multiple countries in this environment, it is a credit to our teams in Australia and Mongolia that our pilot production program – Mongolia’s first – is on track to start next month as planned.
“Our exploration program continues to deliver discoveries of coals at CBM depths – but progress has been slower than planned due to issues such as the entry of new operators this year and clunky adjustments in the service sector in response to that.
“We are putting in place various actions to improve performance in this area.”
Elixir has advanced the Venetian-1, Orio-1 and Yangir-5 and Bulag Suuj-2 wells in its regional exploration works.
The Venetian-1 well was drilled 882 metres into another coal-bearing sub-basin, intersecting 6.5 metres of coal and carbonaceous siltstone within the CBM depth window.
Orio-1 was successfully spudded to the west of the Yangir area, and drilling of the Bulag Suuj-1 well has been slower than expected due to mechanical issues.
In the Yangir sub-basin, the drilling performance in recent months has also been slower than expected.
The Yangir-4 well, although encountering coal in the CBM depth window, did not reach the planned total depth, despite being re-spudded once. A new well, Yangir-5, has spudded nearby.