Jade Gas said the initial four-well production programme is set to commence soon. Credit: huyangshu/Shutterstock.

Jade Gas, which is focused on coal bed methane assets in Mongolia, has partnered with Yan’an Drilling Wellking Energy Technology Service (DWK) to expedite the development of its Red Lake gas resource.  

This collaboration follows the appointment last month of DWK as Jade’s integrated services contractor as part of efforts to expedite gas production. 

It builds on the initial phase of well design and planning for the first four production wells at Red Lake. 

The partnership aims to negotiate a binding agreement, contingent on the success of the current four wells and regulatory approval, which will see DWK fund the next 20 production wells. 

The terms of the partnership include a revenue-sharing model for gas sales from these wells, while Jade will maintain project ownership and require minimal funding for the upcoming production phase.  

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Jade Gas said the initial four-well production programme is set to commence soon. 

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Although the partnership currently covers only a fraction of the planned 175 wells at Red Lake, it offers Jade an accelerated path to gas sales and provides flexibility for funding future developments across the region, the Australia-based company explained.  

Red Lake hosts substantial gross contingent resources, with estimates ranging from 1C (proven reserves, high certainty) per 118bcf to 3C (possible reserves, lower certainty) per 305bcf, making it one of the largest coal bed methane resources in Mongolia. 

For Jade Gas, the partnership with DWK presents a capital-efficient strategy for developing the Red Lake gas resource.  

DWK executive chairman Dennis Morton said: “The structure of the partnership provides a unique way for Jade to transition to a major gas producer in quick time with only a small number of production wells, offering a way to effectively develop the Red Lake area. It is also a partnership model that is well utilisied in China and importantly supported the accelerated development of the Qinshui Basin.  

“In recent months, we have validated customer demand for gas in the South Gobi region. Now, this partnership with DWK offers Jade the ability to quickly move to develop the Red Lake gas resource to capitalise on this strong market demand.”