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Jade Gas secures Mongolian CBM permits

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World Coal,

Jade Gas Holdings has secured 100% of two highly prospective coal bed methane (CBM) permits, covering an expansive area of greater than 18 000 km2 that sits over existing coal mines and coal deposits. The granting of new prospecting agreement permits (PA’s) to Jade reflects the strong in-country relationships that Jade has with the Mongolian government regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM), and its confidence in Jade to deliver value-adding exploration and appraisal programmes. The granting of these PA’s also builds on Jade’s previous experience in successfully completing prospecting work and successfully negotiating a production sharing agreement (PSA) with the Mongolian government and regulators.

Along with this, the company advises that Red Lake-4 is drilling ahead at 400 m, and Red Lake-2, the fourth well in the six well programme, has recently spudded and is drilling ahead at 151 m. Drilling at Red Lake-3 has been put on hold pending a review following drilling difficulties experienced at 489 m.

Jade CEO, Chris Jamieson, said: “Securing 100% of two highly prospective coal bed methane PA’s is a real coup for Jade and its shareholders. The Shivee Gobi and Eastern Gobi permits are an excellent addition to our flagship TTCBM Project, which allows us to expand our exploration and appraisal for natural gas from the coal seams that sit within the boundaries of these areally extensive permits.

“Our strategy has been to expand our footprint with permits that have the right address, and that address is near and next to existing coal mines and deposits, where we are confident there are coals at depth that have the potential to be gas bearing and producing.

“We are currently drilling Red Lake-2 and Red Lake-4 at our TTCBM Project, which are both drilling ahead toward the coal seams of interest, those being seams IV, III and 0. Red Lake-3 proved challenging with a part of the core barrel and drill bit left downhole. Difficulties were experienced when attempting to return to the interval to recover these items due to hole conditions higher in the hole. The drilling contractor has pulled out of the well and mobilised the rig to the Red Lake-2 location, where they are making strong headway. Analysis of the drilling conditions from Red Lake-3 is underway to identify potential reasons for the lack of stability in this well and methods to improve the chance of drilling success in a potential redrill.”

Shivee Gobi

Jade has secured 100% of the Shivee Gobi PA, which covers an area of 8317 km2 and is located approximately 300 km south of Ulaanbaatar. Within the permit are several known coal deposits, primarily trending from north-east to south-west. Jade has negotiated minimal expenditure commitments on the Shivee Gobi PA over a three-year prospecting period. It is expected that initial desk top study work will be completed over the coming months to better assess its potential, ahead of technical studies, drilling, coal sampling and gas testing. Total expenditure for the three-year period is initially estimated at around US$110 000.

Eastern Gobi

Jade also has 100% of the Eastern Gobi PA, which covers an area of 9691 km2 and is located approximately 450 km south of Ulaanbaatar. The Eastern Gobi PA is home to significant coal deposits that are highly prospective for CBM.

Jade also negotiated minimal expenditure commitments over a three-year prospecting period for the Eastern Gobi PA. It is expected that initial desk top study work will be completed over the coming months, with total expenditure for the three-year period initially estimated at around US$160 000.

TTCBM Project

Two rigs continue to operate on what is now the third and fourth wells in the six well drilling programme at Red Lake, those being Red Lake-4 and Red Lake-2. These wells are a follow up to the eight well drilling program back in 2019 at the company’s CBM gas project over the PSA area of the Tavantolgoi XXXIII unconventional oil basin in Mongolia (TTCBM Project).

Jade is targeting natural gas from three coal seams of interest (IV, III and 0) across the central core area of the permit, which has an independently assessed prospective resource of 1 trillion ft3 of gas.

Red Lake-4

Red Lake-4 is the third well in Jade’s six-well programme and is located approximately 1.5 km southeast of Red Lake-1. The well spudded on 31 January 2022 and will be cored to a depth of around 1000 m, with an evaluation programme consistent with Red Lake-1. The coal seams of interest are expected to be intersected at around 700 – 900 m depth, with the well currently drilling ahead at 400 m.

Red Lake-3

Red Lake-3, the second well in the programme, was spudded on 21 January 2022 and experienced wellbore issues that have resulted in the deferral of drilling activities in this location.

The well reached a depth of 489 m at which point the core barrel separated from the drill string. The drilling team attempted to fish the core barrel and bit from the hole, however, the attempt to reach the core barrel was hindered by well bore restrictions in an area approximately 90 m above the position of the core barrel.

The decision was made to move the rig to Red Lake-2 to provide an opportunity to assess the drilling conditions of the hole to better understand the cause of restrictions and drilling options to improve the chance of success for a potential redrill adjacent to the location.

Red Lake-2

Red Lake-2 is the fourth well in Jade’s six-well programme and is located approximately 2.5 km west of Red Lake-1. The well spudded on 6 February 2022 and has made strong progress, drilling ahead at 151 m. The well will be cored extensively with the coal seams of interest expected to be intersected at depths of between 600 – 800 m.

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