Talon Energy Ltd (ASX:TPD) welcomes news that its joint venture with TMK Energy Limited on the highly anticipated Pilot Well Drilling Program within the Nariin Sukhait area of the Gurvantes XXXV CSG Project in the South Gobi Basin of Mongolia is moving forward at a clip.
Talon funding
The Pilot Well Program is primarily funded by Talon, which elected to enter Stage 2 of the farm-in agreement in early December and is paying the first US$3.15 million towards what is budgeted to be around US$3.5 million, with the two companies paying their proportionate share of further costs over and above US$3.15 million.
All regulatory approvals have been secured and drilling operations at the Gurvantes XXXV Pilot Well Program are expected to commence in the coming weeks.
The site is now ready to receive the drilling rig, following site preparation and the construction of a semi-permanent camp to house the drilling and operations staff.
Rig crew mobilising to site
Major Drilling, one of the world’s largest international drilling services companies, supplied the rig and has recently commenced mobilisation of personnel and equipment to site. The company expects to kick off drilling within two weeks.
The Pilot Well Program includes the drilling of three individual production wells spaced around 200 metres apart and centred on the SL_02 exploration well location.
Drilling of the three production wells is expected to take around seven weeks. Once drilling is done, downhole pumps will be installed and surface facilities will be connected to the wells, which will take another month after drilling wraps up.
The company will then commission pilot well pumps, the dewatering process will commence and first gas breakthrough is expected within one or two months from being placed on production.
The gas flow rates achieved from the production testing are expected to be sufficient to allow the gas to be used for power generation that can be sold to the coal mining operations pursuant to the recently signed Cooperation Agreement with the MAK group of companies.
Environmentally friendly use of gas
This will demonstrate proof of concept and will also be a more environmentally efficient use of the gas produced as opposed to flaring the gas to atmosphere.
In the meantime, planning for the installation of gas-powered electricity generation units continues.
TMK Energy CEO Brendan Stats said: “Our team in Mongolia has been busy with preparations for the upcoming Pilot Well Program, including building the camp and the drill pads.
“It is an exciting stage for the team as the drill rig makes its way to site after the significant efforts of many during the preparative stages of planning for the commencement of this Pilot Well Program.
“With commencement now imminent, it signals the start of eight months of activity on site. Last year’s work program identified significant gas resources in the ground, and the pilot well program aims to demonstrate that we can flow gas to surface at attractive commercial rates.
“We continue to progress planning for gas-fired power generation to utilise produced gas and help meet demand for reliable energy in the area from ‘MAK’, our local offtake partner.
"The Pilot Well Program represents an important milestone in the project development as we aim to flow first gas to surface and take our first step toward commercialisation, demonstrating the potential of coal seam gas in the Gurvantes Project.”
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