Gobi CSG Project in Mongolia to Reach Peak Pilot Production This Month: TMK

TMK Energy Ltd. said Thursday all seven production wells in the pilot phase of the Gurvantes XXXV Coal Seam Gas (CSG) Project in the South Gobi basin of Mongolia are on course to reach optimum rates by the end of August.

“[T]he LF-07 pilot production well at the 100 percent-owned Gurvantes XXXV Coal Seam Gas Project has been successfully completed for production and is now undergoing final commissioning activities with the well expected to be placed on production in the coming days”, the West Perth, Australia-based company said in a regulatory filing.

“The company also took the opportunity to perform maintenance on the LF-06 pilot production well whilst resources were available onsite. LF-06 was worked over with the downhole pump pulled and cleaned, and the fill at the bottom of the well cleaned out to reduce the possibility of future production interruptions with that well. LF-06 was successfully placed back on production earlier this week.

“With seven producing wells at the Pilot Well Project, the company now has adequate redundancy available to allow it to plan routine and hence cost-efficient preventative maintenance (i.e. scheduled workovers) in advance which will assist with the implementation of the overall reservoir management plan and ultimately, should deliver higher rates of water and gas production”.

Last December TMK signed a binding memorandum of understanding with Jens Energie LLC (JEL) for the offtake of gas from the first six pilot wells. JEL is expected to convert the gas into electricity for supply to Mongolian customers.

The project spans about 8,400 square kilometers (3,243.26 square miles). The site is less than 20 kilometers (12.43 miles) from the Chinese border and near existing gas infrastructure in northern China. TMK says the location presents a potential for export to China.

“With the drilling operations phase now complete, there is no further major capital expenditure planned at the Pilot Well Project in the short to medium term”, TMK chief executive Dougal Ferguson said Thursday.

“All the data continues to point to a positive outcome being achieved in the coming months, with reservoir pressures continuing to reduce towards the target critical desorption pressure”, Ferguson added. “With the help of additional production data acquired from LF-04, LF-05 and LF-06 since early 2025, we are gaining a better understanding of the reservoir and placing a renewed emphasis on the overall reservoir management plan with the objective of maximizing both water and gas production in the near term and ultimately proving commerciality of the resource”.

TMK added, “A refined reservoir management plan is being developed and will be implemented in conjunction with LF-07 being brought on production, at which time the impact of the reservoir pressure reduction at that location can be reliably measured”.

“This important data point will demonstrate how much the pressure in the reservoir has been reduced at the LF-07 location (approximately equidistant from LF-01, LF-02 and LF-05) since the inception of production at the Pilot Well Project and provide additional data with respect to the impact of LF-07 on nearby wells”, TMK said

“The conclusion of drilling operations marks the end of an intensive period of capital spending which is now forecast to reduce significantly in the short to medium term with focus returning to optimizing production rates, maintaining a low, fit for purpose cost base and sourcing project partners to co-fund the next stage of development of the Gurvantes XXXV Project”.

In June 2024 TMK said Mongolia’s Environment and Tourism Ministry approved the project’s environmental impact assessment, allowing the company to conduct drilling and appraisal activities through 2029.

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