Australian junior Jade Gas has reported strong results from its production drilling campaign at the Red Lake coal seam gas (CSG) field in Mongolia’s South Gobi region, paving the way for near-term commercialisation through a compressed natural gas (CNG) project.
The company announced on Friday that horizontal drilling at its second production well intersected more than 800 metres of net coal, yielding a total of 1,500 metres of gassy coal across both initial wells. Encouragingly, gas levels in the second well exceeded those recorded in the first, based on gas detector readings and drilling mud observations.
Both wells are currently being completed for production, with first gas expected within three to four weeks.
Jade is in advanced discussions with a midstream partner to supply fully integrated CNG equipment. The modular facilities will allow lightly processed gas to be converted into a marketable form, enabling supply to local markets in the South Gobi — including displacement of diesel-powered coal haulage trucks, which currently dominate regional transport.
The second well was drilled to a total depth of 1,507 metres, including a 902-metre lateral section, which intersected 802 metres of net coal — an impressive 88.9% net coal pay in the target seam.
As with the first well, the lateral will be completed using a 5½-inch pre-drilled liner and staged cementing tool, with a cementing packer placed just above seam IIIb.
With production equipment now being installed, Jade will soon begin flow testing and analysis to inform the development plan for the Tavan Tolgoi (TT) CBM field, which holds a 2C gross unrisked contingent resource of 246 billion cubic feet of gas.
“Production drilling results confirm our confidence in the Red Lake gas field as a future world-class gas producer,” said Jade executive chairman Dennis Morton. “We will complete these first two wells and bring them online as soon as possible. We then eagerly await confirmation of gas flow rates.”