TMK’s gas offtake deal to fulfill early commercialisation plan for Mongolian CSG
TMK’s plan for early commercialisation of its Gurvantes XXXV coal seam gas project has been boosted by the signing of a milestone cooperation and electricity offtake agreement.
The agreement expands the company’s level of cooperation with Mongol Alt LLC (MAK), which currently owns and operates the coal mining lease where the Gurvantes XXXV is located.
Under the agreement, MAK will use gas produced from TMK Energy’s (ASX:TMK) three planned pilot production wells for modular power generation of between 1 megawatt to 10 megawatts.
This gas will be sold to MAK at the prevailing local wholesale price rather than be flared.
TMK has also agreed to provide MAK with the water it will produce in the early stages of operating its pilot well program, which removes the requirement that it builds and operates separate water storage and handling facilities.
In return, MAK will provide the company with access to its heavy machinery and support equipment and personnel at commercial rates, which is expected to assist in the construction of the pilot well program as well as drill pads and associated facilities.
“Close cooperation between MAK and TMK will be mutually beneficial allowing for significant efficiencies and the ability to better utilise the valuable resources of produced water and produced gas from the pilot production wells, in a manner that is both environmentally sensible and commercially attractive,” chief executive officer Brendan Stats said.
“The opportunity to generate and sell power to MAK will allow TMK to demonstrate that the Gurvantes XXXV Project can provide a new and scalable domestic solution to meet the growing energy demand of the South Gobi region, and help address Mongolia’s energy security, reliability and independence.”
Successful exploration allowed the company to define a 1.2 trillion cubic feet Contingent Gas Resource (2C) certified for the Nariin Sukhait area.
The three-hole pilot program will be drilled to understand the water and gas production profiles.
Drilling of the holes is expected to take about eight weeks to complete.
These will be tied into the surface facilities, which includes metering skids, a flare stack and water disposal facilities, and then placed on pump to commence the process of pressure drawdown prior to gas breakout.
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.