Fully gas saturated coals suggest probability of high class resource for EXR

By Trevor Hoey. Published at Jul 8, 2020, in Energy

Elixir Energy Limited (ASX:EXR) has provide a positive update on its laboratory adsorption testing results , announcing fully gas saturated coals identified in Nomgon-1.

The final key laboratory test results from the Nomgon-1 well which was announced as being a coal seam gas discovery on 26 February 2020 have now been completed.

Elixir managing director Neil Young was buoyed by the results, and he explained the subsequent implications in saying, “Identifying fully gas saturated coals in Nomgon-1 is an excellent result, given the very positive consequences this should have for coal seam gas pilot production testing and ultimately a field development.

‘’Nomgon-1’s very thick coals that have now been identified as being fully gas saturated, suggesting a potentially very high class resource has been found.”

As a backdrop, travel and other restrictions due to COVID-19 delayed the volume and timing of transmission of coal samples to an international standard SGS laboratory in China for some months, but moving forward this is expected to be smoother.

Due to these limitations, only one sample was analysed in the main “100 series” coal seam, but a broader range of samples will be tested in future.

The resultant adsorption isotherm data derived from this main seam test, combined with the wellsite desorption analysis, proximate analysis, gas chromatography and Injectivity Fall Off Testing (IFOT), are interpreted to indicate this main coal to be near fully gas saturated.

Although there is a complex interaction between the multiple different factors that characterise a coal seam gas play, there are potentially very positive consequences of full gas saturation for a coal seam gas play.

Nomgon-2 ready to spud ahead of Nomgon-1 pilot test

One of the key factors is that the pilot production design could be substantially simpler and cheaper.

On this note, management is aiming to conduct a pilot production testing 2021 provided a successful appraisal campaign can be executed in 2020.

Production testing should be characterised by early gas production, not a lengthy water producing phase to induce pressure draw-down and gas breakthrough.

Water management issues in the development phase could become simpler and cheaper, hence significantly improving gas production economics.

While this news in itself should be positively received, it is also worth noting that the Nomgon-2 well is due to spud very shortly.

This well is intended to produce the same suite of test results as its predecessor Nomgon-1.

These results will become progressively available after the well reaches its target depth and samples are either analysed on-site or sent to laboratories in Mongolia and China.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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