- 01Jade drills third Red Lake well, testing five laterals.
- 022,950m in-seam target may boost gas recovery.
- 03Talks advance on $1.1bn Phase 1 funding.
Jade Gas Holdings (ASX: JGH) has commenced drilling of its third horizontal production well at its Red Lake coal bed methane (CBM) project in the South Gobi region of Mongolia.
The well will test an advanced multi-lateral completion design incorporating five lateral sidetracks from the main wellbore and is believed to be the first of its kind in the country.
Approximately 3,700 metres of total drilling—including a targeted 2,950m of in-seam multi-lateral drilling—will target Seam IIIb, the same coal seam intersected by Red Lake’s two existing production wells.
The targeted in-seam length represents a significant increase over that achieved in either of the previous single-lateral wells.
The Red Lake field sits in the Tavan Tolgoi Basin, which has high demand for electricity, fuel and the base load energy supply necessary to underpin the region’s intermittent renewables.
Next Logical Step
The multi-lateral approach is seen as the next logical step at Red Lake, given the extensive coal seams.
By increasing contact with gas-bearing coal from a single main wellbore, the design has the potential to expand the well’s drainage area, improve gas recovery, and achieve higher flow rates.
Drilling and completion results, together with subsequent dewatering and gas production performance, will help Jade assess these potential benefits, optimise future well configurations, and strengthen operational planning for the scale of activity anticipated in 2027.
They will also provide valuable technical and operational data to optimise well design and support preparations for a major drilling campaign targeted for the new year.
Executive director Dr Ian Wang expects the new design to yield “materially better production performance” than the existing single-lateral wells, including higher gas flow rates, adding that it represents an important step in refining well designs, establishing drilling, and completion practices for Jade’s future campaigns.
Red Lake Discussions
Jade has advanced discussions with representatives of a Chinese-led consortium comprising PT Beijing Energy Linking, PetroChina, and Hunan Geology & Mining Technology Co which have committed a combined $1.1 billion in development funding under a collaboration agreement signed in July for Phase 1 of the Red Lake project.
The discussions covered several important aspects of the proposed arrangements including the allocation of project responsibilities, cost-recovery mechanisms, and the financing structure.
Jade confirmed all parties now have a clearer understanding of the remaining requirements around funding commitments, timing, and associated safeguards.
Dr Wang said the company was pleased with the continued progress of discussions, with Jade and the consortium maintaining a strong commitment to finalising the definitive agreements.
Phase 1 of Red Lake will comprise 175 wells, which is approximately 20% of the total drilling planned across the 60 square kilometre development area within Jade’s broader 665 sq km permit area.
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