Elixir Energy Ltd (ASX:EXR) is encouraged by promising early flow rates from ongoing pilot production testing at the 100%-owned Nomgon IX CBM Production Sharing Contract (PSC) in southern Mongolia.
Operations at the Nomgon pilot production plant continue as part of the company’s Pilot Production Program while also at the project the 2022 drilling program has been completed.
There were 19 wells drilled in the year for 11,576 metres and these were all delivered safely and on budget.
Elixir’s managing director Neil Young said: “Establishing pilot production at Nomgon has been the key focus for our CBM project in 2022 and appears to be delivering a very positive result to date. Stabilised gas flow rates are expected early in 2023."
Pilot Production Program
Nomgon-9 well has seen growing, although currently unstabilised, water and gas rates delivered through a variable choke.
The produced water rates, which were low in the first place due to the high gas-saturated nature of the coals, are decreasing and the casing (gas) pressure is steadily increasing.
In an encouraging sign, the flare from this well extends above the shielding structure, which has been put in place for environmental, etc, reasons.
At Nomgon-8, the well has just had a down-hole pump repaired and fluid from this well is starting to be added to flows from Nomgon-9.
Gas samples from the flow tests have measured 99% methane content. The salt content of produced
water at 4,190ppm is fresher than previously measured. Both factors support materially lower costs and environmental impacts in a development stage.
Pilot production will continue into the New Year and the company’s plan to determine if a commercial flow rate can be established is on track.
Nomgon IX location map.
Exploration and appraisal drilling
Elixir’s exploration and appraisal drilling program for 2022 is now complete, with 17 wells drilled in the year, excluding the Nomgon-8 and 9 pilot wells.
In the last month, Elixir mobilised Major Drilling Company to drill the final two wells at Big Slope and a new method has proven successful.
Major introduced an enclosed mud system to the program and drilled the last well, Big Slope-6, to a total depth of 460 metres in less than 10 days.
This is the fastest rate of penetration Elixir has seen in the South Gobi Basin with the sophisticated mud system improving hole stability.
Big Slope-6 intersected 17 metres of coal with desorbed gas rates in excess of 8 cubic metres per tonne (on a raw gas basis), which is the highest yet in the Nomgon IX PSC.
Prior to this well, Major started its appraisal drilling campaign with the shallow Big Slope-5 well, which reached its total depth in basement at 214 metres and intersected 2.4 metres of coal.
The Top Diamond Drilling LLC rig completed its program at Big Slope-3 and 4, which intersected 28 and 59 metres of coal respectively.
“New drill system pays dividends”
"Although Major Drilling started late in the year, at a time of very adverse weather conditions, the application of new drilling systems has paid dividends,” Young said.
“Our wells at Yangir and Big Slope can now be drilled more quickly and with greater confidence.”
The Big Slope area is continuing to deliver gas-saturated coals for Elixir.
In total, the company drilled 11,576 metres in 2022 in Nomgon IX. Analysis and interpretation of this program is underway and will supplement the emerging results of the pilot program as the key inputs for the company’s Mongolian CBM plans in 2023.
"Finally, as we complete our field program for 2022, I would like to pay tribute to our Mongolian field and contractor teams, who have delivered this program safely and responsibly,” the managing director added.
"Weather conditions in the South Gobi are now routinely below minus 20 degrees, yet our group has performed tirelessly in these hostile conditions.”