Elixir’s Deep Coal Gas Resource Faces Economic Viability Questions Despite Big Volume Boost

Elixir Energy’s Deep Coal Breakthrough

Elixir Energy Limited has announced a significant advancement in its Grandis Gas Project with the maiden contingent resource booking of 245 billion cubic feet (BCF) of recoverable gas from deep dry coals in ATP 2044 and ATP 2077. This certification, conducted by independent auditor ERCE Australia Pty Ltd, marks a pivotal step in unlocking the vast gas potential of the Taroom Trough region.

The newly certified resource represents a 17% increase in the project’s 2C recoverable gas resources, now totaling 1,715 BCF. More strikingly, the total gas in place within these deep coals has more than doubled, rising 120% to 58,137 BCF. This surge highlights the considerable scale of the resource base that Elixir is now positioned to develop.

Technical Validation and Geological Context

The deep dry coals targeted belong to the Kianga Formation and Back Creek Group, geological units that were a primary focus of the Daydream-2 well drilled in 2023 and 2024. This well was instrumental in confirming significant gas content at depths between 3,698 and 3,786 metres, with production testing successfully flowing gas from isolated coal seams for the first time in the Taroom Trough.

Notably, the gas from these coals exhibits a distinct chromatographic signature compared to sandstone-sourced gas, reinforcing the uniqueness and potential value of this resource. The gas is predominantly methane (93%) with minimal CO2 content (1%), suggesting relatively straightforward processing requirements to meet pipeline specifications.

Resource Classification and Development Outlook

While the contingent resource is classified as 'development unclarified' under the 2018 PRMS SPE-PRMS standards, indicating that economic viability has yet to be established, the booking nonetheless represents a material milestone. The applied recovery factor is conservatively less than 1%, reflecting early-stage assumptions about extraction efficiency from these deep coal seams.

Elixir’s Managing Director, Neil Young, emphasized the significance of this achievement, noting that the maiden booking from the deep dry coals validates the company’s strategic focus and opens up substantial upside potential for the broader play. The company holds 100% working interests in the relevant ATPs, positioning it well to advance development plans.

Strategic Implications and Next Steps

The deep dry coal contingent resource is expected to complement Elixir’s existing tight sand gas resources, potentially leveraging existing infrastructure without the need for additional drilling. Production methods will likely involve stimulated vertical, deviated, and horizontal wells, with minimal processing required due to the gas’s dry nature.

Looking ahead, the key challenge will be to progress from contingent to commercial reserves by clarifying development pathways and confirming economic viability. The independent certification by ERCE, a globally recognized auditor with over 40 years of experience, lends credibility to the resource estimates but also underscores the technical complexity and risk inherent in deep coal gas extraction.