TMK’s successful coal seam gas drilling at the Gurvantes XXXV project has attracted the attention of the proverbial 800lb gorilla in PetroChina.

PetroChina Daqing Tamsag (DATAMO), a wholly-owned subsidiary of the Chinese state-owned giant, has signed a binding memorandum of understanding with the company to work together on a non-exclusive basis to “enhance and accelerate” the development of the project to provide Mongolia with domestically produced natural gas, a cleaner source of energy than coal based power, which is the predominant fuel used in Mongolia at present.

It also includes provisions for DATAMO to invest in either TMK Energy (ASX:TMK) or the project on terms to be agreed in due course and subject to standard conditions such as formal agreements and regulatory approvals.

“Being able to introduce a subsidiary of PetroChina to the project at such an early stage is extremely encouraging and a validation of the excellent technical results we have had to date and talks to the quality and size of the overall project,” chief executive officer Brendan Stats said.

“PetroChina has expertise in the full value chain of oil and gas, from drilling through to development and eventually commercial production.

“We are very confident that this new relationship will continue to grow and more definitive agreements can be entered into as this process evolves.”

DATAMO has been operating in Mongolia since 2005 and is the owner and operator of the Toson-Uul XIX and the Tamsag XXI petroleum blocks in the Dornod province.

Since commencing operations in Mongolia, DATAMO has drilled hundreds of wells and invested a significant amount of capital into its Mongolian operations.

DATAMO currently produces the vast majority of oil produced in Mongolia from its two petroleum blocks, most of which is exported as crude oil to China.

Gurvantes XXXV CSG project

TMK has enjoyed technical success at the project with the Snow Leopard-3 well returning high permeability readings of 47 milidarcy (mD) over the 70m of coal intersected in the upper coal seam.

The result is broadly consistent with results in Snow Leopard-2 well and bodes well for future coal seam gas production.

Coal core from the well has also been sampled for gas desorption testing with preliminary results indicating that the seams contain high gas content consisting mainly of methane (95%) with low levels of CO2 (2.8%).

A pilot program to determine the wells’ ability to produce gas is currently being planned.

Success will also unlock the rest of the 8,500km2 project area given that current operations are restricted to just a tiny part of it.

Drilling is expected to start imminently on the fourth and final well in this program.




This article was developed in collaboration with TMK Energy (ASX:TMK), 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.