TMK Energy signs co-operation and offtake agreement for Gurvantes XXXV pilot gas
TMK’s deal with MAK allows for better utilisation of water and gas resources produced by the Gurvantes XXXV pilot program.
Oil and gas explorer TMK Energy (ASX: TMK) has signed a cooperation and electricity offtake agreement with privately-owned Mongolian mining conglomerate Mongol Alt (MAK Group) to advance the Gurvantes XXXV coal seam gas project in the South Gobi Basin.
The agreement is also expected to help address Mongolia’s energy security, reliability and independence needs.
MAK Group owns and operates a coal mining lease where TMK is conducting a maiden pilot well program for the Gurvantes XXXV project, which covers an area of approximately 8400 square kilometres in the central Nariin Sukhait area.
Within the project area there are six active coal mining operations, 26 coal mining leases and numerous coal exploration licences which together, create a very large coal resource.
MAK’s coal mine is a large user of energy in Nariin Sukhait and has a high demand for water which is considered a valuable local resource.
Early commercialisation
The cooperation agreement is expected to lead to efficiencies in TMK’s pilot well program and provide a pathway to early commercialisation through the provision of electricity to MAK.
The program will include up to three production wells and metering, production and testing facilities, as well as ancillary equipment needed to produce gas to the surface.
The gas will be used for onsite modular power generation (up to 10 megawatts) which will be sold to MAK at the prevailing local wholesale price.
TMK said the agreement promotes an environmentally-sensible and commercially-attractive way to utilise the gas, which would otherwise be flared into the atmosphere.
Excess water
The company has also agreed to provide MAK with the excess water produced in the early stages of the pilot program, removing the need for TMK to build and operate separate water storage and handling facilities and promoting re-use of the resource.
In return, MAK will provide TMK with access to its heavy machinery and support equipment and personnel (at commercial rates) during construction of drill pads and associated facilities.
Valuable resources
TMK chief executive officer Brendan Stats said the cooperation agreement allows for better utilisation of valuable water and gas resources produced by the pilot program.
“The opportunity to generate and sell power to MAK will allow us to demonstrate that Gurvantes XXXV can provide a new and scalable domestic solution to meet growing energy demands in the South Gobi region and help address Mongolia’s energy security, reliability and independence,” he said.
“We look forward to a long and fruitful relationship with MAK, which is one of the largest energy users in the immediate area, as we continue to expand and develop the already proven substantial gas resource in Nariin Sukhait.”