TMK Energy Limited reveals strong pilot well results and a robust phased development plan for its Gurvantes XXXV Coal Seam Gas project in Mongolia, underpinned by independently certified resources and strategic partnerships.
- 1.2 trillion cubic feet (TCF) of 2C contingent gas resources certified
- 5.3 TCF of prospective resources indicating significant upside
- Pilot wells demonstrate reservoir pressure decline towards desorption pressure
- Memorandum of Understanding signed with Mongolia’s Ministry of Energy for power generation offtake
- Phased development plan targets low-cost resource exploitation with robust economics
A Landmark Step for Mongolia’s Energy Future
TMK Energy Limited (ASX:TMK) has delivered a comprehensive update on its Gurvantes XXXV Coal Seam Gas (CSG) Project, located in Mongolia’s South Gobi Basin. The announcement highlights significant technical progress, including pilot well production data that aligns closely with reservoir modelling, and a clear conceptual development plan that charts a pathway to commercial gas production.
The project boasts an independently certified 1.2 trillion cubic feet (TCF) of 2C contingent gas resources, with an additional 5.3 TCF of prospective resources that underscore the substantial upside potential beyond the core area. These figures position Gurvantes XXXV as a world-class CSG asset, particularly given the exceptionally thick coal seams and high gas content demonstrated in recent drilling campaigns.
Pilot Wells Confirm Reservoir Performance
Seven pilot wells have been successfully drilled and are producing, with reservoir pressure steadily declining towards the critical desorption pressure needed for commercial gas flow. This pressure reduction is a key milestone, as it confirms the reservoir’s ability to release gas efficiently. TMK’s reservoir management plan has been updated to reflect these encouraging results, which have also driven a significant reduction in operating costs over the past year.
The pilot well program’s success provides high confidence in the reservoir’s permeability and gas productivity, validating the company’s phased development approach. This strategy prioritises the exploitation of the lowest-cost 2C resources first; specifically, 722 billion cubic feet (BCF) from the upper coal seams at depths up to 750 metres; before moving to deeper resources.
Strategic Partnerships and Market Opportunities
TMK has formalised a Memorandum of Understanding with Mongolia’s Ministry of Energy, focusing on the use of gas for domestic power generation. This agreement signals strong governmental support and opens avenues for offtake arrangements that could underpin project economics. Additional discussions are ongoing with potential partners across upstream, midstream, and downstream segments, aiming to secure funding and value-adding collaborations.
Mongolia’s energy landscape is heavily reliant on coal-fired power and imported fuels, with growing electricity demand forecast to double by 2030. TMK’s project offers a cleaner, indigenous alternative that could transform the country’s energy mix and support economic development in the South Gobi region.
Robust Economics and Scalable Development
The conceptual development plan envisions a modular approach using Production Development Units (PDUs), each comprising 25 vertical wells. A single PDU is expected to deliver approximately 24 BCF of recoverable gas at peak rates of 4.4 million standard cubic feet per day, with modest capital expenditure estimated at around US$10 million per unit. Scaling up to 30 PDUs would develop the initial 722 BCF resource, supporting production rates up to 200 million standard cubic feet per day over a 35-year project life.
TMK’s phased approach allows for progressive conversion of contingent resources into reserves as production data accumulates and market conditions mature. The company’s focus on low-cost resource development first enhances project resilience amid regional gas price fluctuations, currently around US$10 per thousand cubic feet.
Looking Ahead
With a strong technical foundation, supportive government engagement, and a clear commercial pathway, TMK Energy’s Gurvantes XXXV project is poised to become a cornerstone of Mongolia’s energy transition. The coming months will be critical as the company advances funding discussions and further delineates its development timeline.
Bottom Line?
TMK Energy’s Gurvantes XXXV project is advancing steadily from exploration to commercial gas, setting the stage for Mongolia’s cleaner energy future.
Questions in the middle?
- How will TMK secure the necessary funding and partnerships to scale development?
- What are the timelines and milestones for converting contingent resources into proven reserves?
- How might Mongolia’s evolving energy policies impact project economics and market access?