Tlou Energy releases operational report of quarter ending 30 June

Key events during the quarter

• The Lesedi 3 & 4 pods continue to dewater and produce gas from the coal as the company aims to confirm commercial gas flow rates, with further updates to be provided in near-term.
• Progress in the gas-to-power tender has led to Tlou successfully going through the technical and financial evaluation stages, and is now at the final stage, being the negotiation of a power purchase agreement.
• Downstream environmental approval has been secured. The authorisation is valid for 30 years and includes development of CBM power generation, including the drilling of up to 200 production pods and installation of transmission lines.

Dewatering and gas flow testing

During the quarter, the company's operations have made excellent progress and are proceeding according to plan at the Lesedi CBM project.

In the first quarter of the year, the company completed the drilling of two production pods, designated Lesedi 3 and Lesedi 4. Dewatering of the coal then commenced. During the current quarter, dewatering continued at these pods with both wells reaching critical (gas) desorption pressure (CDP). Reaching CDP is a positive milestone in the operation and means that as a result of a successful dewatering process, gas begins to come out of the coal.

The next stage of the operation involves continued water pumping which should see gas pressure steadily increase to an optimal point so that sustained testing and flaring of the gas can begin. The aim is to achieve a continuous flow of gas from the well. A CBM gas flow typically starts out from an initial rate and then steadily increases to reach a commerciality threshold.

As part of this process, gas is periodically flared from the wells. Post quarter end, a short-term flow test was successfully conducted at Lesedi 3 and a video clip of the gas flare from this test is available at http://tlouenergy.com/presentations.

The company looks forward to being able to announce a commercial gas flow rate. In the interim operations personnel are carefully managing the testing procedures to try and ensure the best possible result. The dewatering and gas flow testing process is separate from the gas-to-power tender negotiations. Further updates on the progress of the wells will be provided as operations continue.

Gas-to-power tender

In October 2018, the company submitted a comprehensive response to the request for proposal (RFP) for the development of a maximum of 100 MW of CBM fuelled power plants in Botswana.

During the quarter, the company successfully passed the technical and financial evaluation stages of the gas-to-power tender. The process is now at the negotiations stage, aimed at agreeing a power purchase agreement. These negotiations are confidential and are being led by the government of Botswana. Further progress will be announced by the government in due course.

Downstream environmental impact statement approval

Botswana's Department of Environmental Affairs (DEA) has approved the environmental impact statement (EIS) for up to 20 MW of CBM power generation including the drilling of up to 200 production pods, a 66 kV transmission line and a solar farm up to 20 MW.

In 2018, the company commenced work on its application for an EIS for downstream development (power generation and transmission). The company already has approval in place for its upstream activities (development drilling and exploration).

Downstream EIS approval is a major achievement as it is the final environmental authorisation required to move the Lesedi CBM project through to commercialisation. The EIS is for all the specified project activities in the company's application, is valid for 30 years and provides the company the flexibility to rapidly expand power generation activities.

Read the article online at: https://www.worldcoal.com/cbm/30072019/tlou-energy-releases-operational-report-of-quarter-ending-30-june/