Jade Gas restarts drilling at BNG to boost resource potential in Mongolia

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By Colin Hay - 
Jade Gas ASX JGH Baruun Naran Mongolia

Jade Gas (ASX: JGH) has resumed its drilling program at Baruun Naran (BNG), adjacent to the company’s TTCBM Red Lake project in Mongolia.

Jade has returned to BNG to complete the remaining five of eight appraisal wells as it looks to increase its resource numbers.

Located immediately to the west of TTCBM, BNG is considered to have high potential for gas-bearing coals.

Jade is testing that premise with joint venture (JV) partner Khangad Exploration, a subsidiary of Hong Kong-listed Mongolian Mining.

Resumption of drilling

Executive chair Dennis Morton said the first three prospecting wells at BNG have been successfully drilled, with the BNG-3 well recording the second thickest gassy coal interval to date of 104.6 metres.

It is planned that the final five wells in the BNG testing campaign will be completed within Q2 2024.

“The resumption of drilling at the BNG project kicks off our 2024 field activity program after a pause for the winter,” Mr Morton said.

“The BNG project is growing in importance as a solution for the energy shortage in the area.”

“Our partner, MMC – a very large energy user, is eager to see this field developed as fast as possible to enable it to reduce reliance on imported diesel for its operations.”

“With a busy drilling schedule over the next few months, we hope to expedite the appraisal phase and move the JV one step closer to production.”

Further success at BNG is expected to support the conversion of prospective resources to the contingent level and open the door for an accelerated pathway to securing a long-term production-sharing agreement over the permit area.

“Ultimately, this will provide Jade with two significant energy projects in the South Gobi region, highly needed at a time with clean energy demand growing rapidly from multiple customer markets,” Mr Morton said.

LNG deal signed

Jade extended its existing memorandum of understanding (MOU) with Mongolia’s largest gas distributor UB Metan (UBM) in early March by agreeing to supply a new liquefied natural gas (LNG) fuelling station.

The gas supply agreement will provide a new domestic source of energy in the South Gobi region as it looks to progressively displace diesel.

The new agreement added to a non-binding MOU signed with UBM in April 2022 and a March 2023 strategic capital placement with that company to pursue a strategic partnership to decarbonise Mongolia with a cleaner source of energy.

The recent completion of UBM’s LNG fuelling station has raised the priority for the companies to enhance the existing MOU and fast-track negotiations toward an agreement for a local and secure gas supply from TTCBM.

It is envisaged that under the enhanced and extended MOU, the parties will focus resources to assess and evaluate midstream requirements to facilitate the conversion of coalbed methane to LNG and the delivery mechanism to connect with UBM’s existing LNG wholesaling operations.

The infrastructure is likely to involve low-cost and small-scale, scalable skid-mounted LNG equipment.