Can Jade Gas Deliver First Production at Red Lake This Quarter?

Steady Progress at Red Lake

Jade Gas Holdings Limited (ASX – JGH) has confirmed that operations at its Red Lake Gas Field continue to advance smoothly, with both coal bed methane wells performing in line with expectations. Since commencing operations in June 2025, the company has maintained stable pumping and dewatering activities, a critical phase in preparing the reservoir for gas production.

The drawdown of reservoir pressure is proceeding according to plan, with the fluid level in the wells being carefully lowered at a controlled rate to avoid damaging the coal seams. This approach mirrors best practices from Jade’s analogue operations in China’s Qinshui Basin, where similar wells have demonstrated rapid and successful development.

Anticipating First Gas Production

Jade forecasts reaching the critical desorption pressure during the current quarter, a key milestone that signals the imminent start of gas desorption and production. The company’s technical team is closely monitoring well performance to ensure the pressure drawdown remains optimal, adjusting operations as needed to safeguard the integrity of the coal seams.

Non-Executive Director Dr Ian Wang highlighted the parallels with the Qinshui Basin, expressing confidence that emulating those successful operations could unlock significant value for shareholders. The expectation is that gas will begin flowing shortly after the critical pressure threshold is crossed.

Operational and Environmental Considerations

Both wells have maintained 100% uptime throughout July, underscoring operational reliability. Water produced during dewatering is trucked to the nearby Tavan Tolgoi coal mine for beneficial use, reflecting Jade’s commitment to environmentally responsible practices.

Looking ahead, the company is evaluating the potential for additional 2D or 3D seismic surveys in the second half of 2025 to further delineate the Red Lake field and optimize development strategies.

Strategic Implications for Mongolia’s Energy Future

Jade Gas Holdings is positioning itself as a key player in Mongolia’s energy transition by developing coal bed methane resources that could reduce the country’s reliance on imported fuels and coal-fired power. The Red Lake project, alongside other permits in the South Gobi region, aims to provide cleaner, locally sourced gas for power generation and transport sectors, contributing to improved air quality and energy security.

As Jade approaches first gas production, the market will be watching closely to see if the company can deliver on its promise to unlock Mongolia’s unconventional gas potential.