Elixir managing director Neil Young said the identification of fully gas-saturated coals suggest a “potentially very energy-intensive per acre resource” has been found. The company has also recommenced its field programme at the South Mongolian production sharing contract with the drilling of Nomgon-2 due to start “shortly”.

According to the company, full gas saturation for a CSG play can mean “potentially very positive” consequences including the possibility for pilot production design to be “substantially simpler and cheaper”. In addition, Elixir expects production testing to be characterised by early gas generation as opposed to a lengthy water-producing phase to induce pressure draw-down and gas breakthrough.

The company said water management issues could also become simpler and cheaper in the development phase, thus “significantly improving gas production economics”. “Identifying fully gas-saturated coals in Nomgon-1 is an excellent result, given the very positive consequences this should have for coal seam gas pilot production testing and ultimately, a field development,” Mr Young said.

Depending on the success of its appraisal campaign scheduled for this year, Elixir plans to conduct a pilot production test in 2021.

The second Nomgon well is due to spud shortly and Elixir said it expects the well to produce the “same suite of test results” as Nomgon-1. These results will become progressively available as the well reaches its target depth. Samples will either be analysed on-site or sent to laboratories in Mongolia and China.