Talon Energy Ltd (ASX:TPD) and TMK Energy Ltd have turned their attention to the second of three pilot production wells currently being drilled at the joint-held Gurvantes XXXV coal seam gas project in Mongolia.
Drilling at Lucky Fox-2 (LF-02) began on Wednesday, May 3, with 138 metres completed by 6:00am AEST on Friday, May 5. The hole sits 200 metres to the south-east of the first pilot well, Lucky Fox-1 (LF-01), where gassy coal was intersected between 151 metres and 375 metres at the end of April.
“We are very pleased to report that the first of our three pilot production wells has been drilled safely, on time and on budget,” Talon Energy chief executive Colby Hauser said at the time.
“Having penetrated 60 metres of gassy net coal is an outstanding result for the first well and bodes well for the remaining two wells and the subsequent production test to see if the project can deliver gas at commercial rates.”
The pilot well program was launched in mid-April, with all three wells spaced 200 metres apart and centred around a separate exploration well, Snow Leopard-2, which was drilled last year as part of a maiden exploration campaign.
In addition to the drilling work, Talon and TMK are progressing the installation of downhole pumps and surface facilities, which will be commissioned in preparation for the dewatering process once drilling wraps up.
Based on testing data from Snow Leopard-2, both companies are confident the dewatering process will be relatively short, with early gas breakthrough from the Lucky Fox production well expected once fully operational.
“Under the current schedule, we expect to have completed all drilling activities by the end of this month, with the installation of the downhole pumps and tie-in of the three production wells due to be completed during June 2023,” TMK Energy chief executive Brendan Stats said.
“Once commissioned, we will be able to turn on the pumps and commence the dewatering process.”
Talon’s farm-in agreement
The pilot well program is being funded by Talon Energy as part of a farm-in agreement signed in February 2021.
Talon acquired its current 33% holding in the Gurvantes project in December last year, after forking out an initial US$1.85 million (A$2.76 million) in funding. Having exercised its option to acquire the stake, Talon is now required to cover a further US$3.15 million (A$4.69 million) in exploration expenses. Any exploration expenses above that amount will be split between Talon and TMK.
Should TMK — which holds the remaining 67% interest — elect to sell its holding in Gurvantes, the farm-in agreement also gives Talon a three-year period of first refusal, effective from February 11, 2022.
Written by Oliver Gray.