Jade goes for green with nation-changing Mongolian gas play

When Jade Gas released its prospectus ahead of listing to the ASX in October last year, it set an ambitious target of turning its JV Tavan Tolgoi coal seam gas project into Mongolia’s first in-country gas producer.

The appeal of Jade’s (ASX:JGH) plan is obvious from the perspective of investor return, but it’s the broader potential of the Tavan Tolgoi Coal Bed Methane (TTCBM) Project to change the energy mix in Mongolia that has everyone excited.

Long a source of anxiety for government, environmentalists and investors, the energy needs of Mongolia’s widely dispersed 3.3 million people have been largely fuelled by coal.

Jade Gas — Coal is the dominant source of energy in dry, cold and sparse Mongolia, according to the International Energy Agency. Picture: IEA

“When you have a look at the breakdown of energy in Mongolia, it really is heavily reliant on imports of oil, gas liquids and electricity – particularly from China, but also from Russia,” Jade Gas CEO Chris Jamieson told Stockhead.

“More than half the population lives in the capital Ulaanbaatar, and during winter there’s obviously a need to keep warm. A lot of low-quality coal is burnt to achieve that, resulting in a fair bit of pollution.”

“There’s also three Soviet-era power plants that burn coal as well, to generate electricity for the city,” Jamieson said.

“That’s a lot of emissions coming from coal and various other products being burned to keep people warm and provide electricity.”

One steppe at a time

Jamieson told Stockhead the process of extracting coal bed methane leaves the coal in the ground – making it twice as clean as legacy coal when it comes to burning methods.

And while coal bed methane is still a fossil fuel, it’s regarded as a primary clean energy source of natural gas.

It’s a homegrown energy source which could prove critical in the initial decarbonisation of the world’s largest landlocked nation and even eventual energy independence.

“If we can extract the natural gas for the coal, the end effect could be a cleaner environment for those in Ulaanbaatar – reducing emissions and really decarbonising the energy mix with a cleaner fuel source,” Jamieson said.

A shared vision

Jade’s vision for the TTCBM Project is no pipedream. Its 40% joint venture partner is Erdenes Methane LLC – an official representative of the Mongolian government.

“Having them onboard is really important, because it shows us that the government is very keen and serious about having this project developed,” Jamieson said.

“Should we prove up a natural gas resource it would be a matter of building the necessary infrastructure with the government, to get the gas to market.”

Thicker than Bowen, surer than Surat

Jade has already intersected 58 metres of gas-bearing coal seams from 145 metres of total coal core drilled at Red Lake-1 – the first of six wells to be drilled adjacent to the Tavan Tolgoi coal mine.

The company lauded the result, with intersections significantly thicker than that of the prolific LNG supplying Bowen and Surat basins in Queensland.

It’s a result that provides encouragement to the current drilling program in the central core area of Jade’s permit, which has an associated prospective resource of 1.0 trillion cubic feet of gas.

On the back of the result, the company has moved to speed up its program, introducing a second drill contractor. The next two Red Lake wells are expected to spud in the coming weeks.

Jade is concurrently running a series of tests to confirm gas content and permeability at Red Lake-1.

Jamieson said it was a very exciting time for the company and its shareholders.

“We’re off to a very encouraging start, with the first well having a lot of gas-bearing coal,” he said.

“While we believe the TTCBM Project has the potential to be world class in its own right, we will continue to seek out other coal bed methane opportunities within Mongolia to complement our Tavan Tolgoi permit.

“We are in the early stages of what could potentially be a really exciting journey for the Company, our shareholders and Mongolia itself.”

This article was developed in collaboration with Jade Gas, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.