EXR could unlock a new sub basin at its Mongolian Gas Project

By Hannah Goldman. Published at Oct 23, 2020, in Energy

Elixir Energy Limited (ASX:EXR) has provided an update on its 100% owned Nomgon IX CBM PCS, located in the south Gobi region of Mongolia, just North of the Chinese border.

It should be noted that China’s energy demand is significant and its gas market continues grow. This month, President Xi Jinping committed his country to net-zero emissions by 2060.

Given its location, this plays right into EXR’s hands especially as China expands the country’s gas network and diversifies its energy supply.

As part of Elixir’s 2020 exploration program, the company will spud a new low-cost strat-hole (Hutul 1S).

The spud will commence tomorrow, with further planning for more wells in the following months. A second drilling rig is being added by Mongolian drilling contractor, Erdenedrilling (ED) and is being mobilised to the Hutul 1S drilling location, 20 kilometres east of the Nomgon-1 well.

This well has the potential to unlock an entirely new sub-basin, – or potentially a large extension of the Nomgon sub-basin.

For EXR, the collective sub-basins across the vast 30,000 km2 PSC could prove up a resource big enough to interest the major international gas players. To date only the small Nomgon sub-basin has hosted CSG discoveries.

EXR currently has a prospective resource of 7.6 tcf of gas (risked “best” (mid) case) over multiple sub basins and there are many other sub-basins that are yet to be explored, so there is enormous scope for significant gas reserves.

Ongoing appraisal work at the Nomgon sub-basin is continuing including laboratory work, ongoing drilling, basin modelling and seismic interpretation and planning of next year’s pilot production test.

Results and work to come

Nomgon-2 core hole’s final gas content results have been obtained from the coal samples.

These recorded dry ash free (DAF) numbers in the main seam averaging 8.6 m3/tonne. This is very similar to the 8.9 m3/t measured in the Nomgon-1 well.

Further Gas Adsorption analysis results for Nomgon 2 are expected next month, with laboratory work being undertaken and/or planned including petrography, sedimentology and age dating.

Unfortunately, the Nomgon 5S strat-hole which was spudded in September has recently encountered time delays caused by drilling and mechanical issues yielding an inability to reach total depth. Elixir and ED have agreed to redrill this strat-hole directly above its current location at a nominal cost.

EXR assures the same prognosis, as the new well will effectively be the same.

According to managing director Neil Young; “we look forward to further information from the somewhat delayed Nomgon 5S strat-hole that is still underway”.

Finally, recently acquired seismic data provides substantial indication of prospectively and enhanced assurance in the new drilling locations Elixir will be targeting in the near future.

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