Talon Energy Ltd (ASX:TPD) welcomes the progress made by partner TMK Energy Ltd at the Gurvantes XXXV CSG Project in the South Gobi Basin of Mongolia where a cooperation agreement has been signed with Terra Energy LLC to accelerate exploration.
Australian-led Terra Energy, which owns and operates the Baruun Noyon Uul Coal Mine within the Gurvantes XXXV Project area, will cooperate with TMK on a drilling and seismic acquisition program, sharing costs and resources.
Accelerating exploration
The accelerated exploration program includes a minimum of four fully cored exploration wells to be drilled and tested for coal seam gas (CSG) in this already well-defined coal-bearing deposit.
This program has recently kicked off with the initial drilling being undertaken by Terra utilising contractors already engaged by Terra, with any subsequent testing activities to be managed by TMK.
About Gurvantes project
The Gurvantes XXXV Project, in which TMK Energy holds 67% and Talon Energy 33%, covers 8,400 square kilometres in what is considered one of the most prospective CSG basins globally.
It is less than 20 kilometres from the Chinese-Mongolian border and close to the extensive Northern China gas transmission and distribution network as well as being near several large-scale mining operations with high energy needs.
To cooperate
The agreement sets the terms under which the parties agree to cooperate on exploration activities within the overlapping licence areas which will drive significant cost savings for both parties.
As well as the drilling, the agreement with Terra includes ~40 kilometres of 2D seismic acquisition.
Additional costs associated with testing specifically associated with CSG exploration will be borne 100% by the Gurvantes Project partners, while any other testing work required for the coal mining operations will be borne 100% by Terra.
The term of the agreement is two years, however, this initial exploration program is only expected to take about two months. Further exploration may follow and if the activities are mutually beneficial, will be governed by the same agreement.
Overlap in data
The rights to explore for and develop coal resources and CSG resources are separate and unique, however, there is significant overlap in the geological data collected from drilling and exploration activities.
TMK Energy’s CEO Brendan Stats said: “With drilling and construction of our pilot well program now complete, we have taken advantage of what is a very timely opportunity to immediately commence what could be another high impact, low-cost exploration program over an area which already has an extensive data set and where we know that coal targets are present.
"We are pleased to have entered into this agreement with Terra Energy so quickly which will assist our efforts in accelerating an exploration program in this area.
“Similar values”
"Terra is an Australian-led mine operator, and we both share very similar values with respect to running a safe and efficient exploration program.
"With the drilling program already commenced, we hope to have the opportunity to further add to our already significant 2C contingent resources identified at Nariin Sukhait if further CSG resources are identified in this exciting new area,” Stats said.
“Strategic benefits”
"The potential discovery of commercial CSG methane deposits within our mining licences may offer strategic benefits to Mongolia and for Terra, the ability to expand our coal production and to lower our operating costs in the years ahead by replacing diesel consumption with locally sourced methane gas,” Terra Energy executive director Matthew Crawford said.