Jade Gas begins work on initial gas wells at Mongolia’s Red Lake project

Australia's Jade Gas has commenced field operations for the initial four gas production wells at the Red Lake coalbed methane (CBM) project in Mongolia's South Gobi region, the company announced on September 23.

The initial plan is focused on establishing commercial gas production and securing near-term gas sales. The four lateral production wells, each to be drilled and completed over a 1km horizontal length, are targeted for completion and commissioning by the end of 2024.

According to Jade Gas, the early gas production drilling programme aims to capitalise on the growing demand for gas in Mongolia, with nearby customer markets demonstrating an immediate need for supply. Jade has established several partnerships for future gas sales from the Tavan Tolgoi CBM project, including with the HK-listed Mongolian Mining Corporation and UB Metan.

The company recently announced it had signed a non-binding term sheet for a major gas production partnership with China-based Yan’an Drilling Wellking Energy Technology Service Company (DWK) to develop the Red Lake gas resource. This commercial arrangement is contingent on the success of the initial four wells.

Once regulatory approval has been obtained, a larger programme, involving the drilling and completion of 20 additional production wells, will commence. DWK has committed to funding the capital required to drill, complete, and commission these wells at Red Lake.