Jade Gas Holdings ASX:JGH
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Today we have a Q&A with Mr Chris Jamieson Managing Director & Chief Executive Officer of Jade Gas Holdings ASX:JGH
Mr Jamieson has held a number of senior executive roles including Group Executive — External Relations at Beach Energy Ltd, an oil and gas exploration and production company. Prior to Beach, Chris worked in corporate finance (transaction support) at EY in Adelaide, London, and San Francisco, as well as in the mergers and acquisitions group at Normandy Mining Ltd, Australia’s largest gold miner at the time.
Mr Jamieson has a background in capital markets, mergers & acquisitions, and investor relations, with over 25 years of extensive oil and gas/resources industry experience.
Mr Jamieson holds a Bachelor of Commerce from the University of Adelaide, along with several post-graduate qualifications including a CPA, graduate diploma of Applied Finance and Investment (FINSIA) and diploma of Investor Relations (AIRA).
Jade Gas Holdings Limited — ASX: JGH
Jade Gas Holdings Limited (Jade) is a gas exploration company focused on the coal bed methane (CBM) potential of Mongolia. Jade’s flagship project is the CBM gas project over the Production Sharing Agreement (PSA) area of Tavantolgoi XXXIII unconventional gas basin, (TTCBM Project).
Jade Gas Holdings Question Time….
1. Chris, you have been at the helm of Jade Gas Holdings Limited for almost a year, can you talk to the developments made during that time?
The team at Jade Gas has been extremely busy, with a focus being on our Flagship TTCBM Project in the South Gobi region of Mongolia. We have taken our technical capability and know-how from Australia and applied it to deliver excellent results from the 2022 drilling program at Red Lake within the TTCBM permit.
We have drilled 11 wells this year, with our final well Red Lake-5 nearing completion. Four of these wells in the Red Lake area of our TTCBM Project provided the results that underpinned a significant Gross 2C Contingent Resource booking of 246 Bcf. All of these wells intersected and recovered large quantities of gassy coal which has de-risked the potential for commercial gas production from this area. Our exploration wells also intersected gassy coal and as a result have increased the size of the gas play to a strike area of greater than 40 kilometres. This is a credit to the work undertaken by the team and the quality of the permits we have.
These results are driving a number of encouraging conversations with potential gas buyers in anticipation of the Red Lake field being commercialised.
The Mongolian Government has committed to a 30% reduction of greenhouse gas emissions by 2030, which it plans to achieve through the displacement of coal generated electricity with renewables supported by gas as a baseload.
Mongolia today is where Queensland was 30 years ago. Queensland had (and still has) an abundance of coal, with no gas production. Today Queensland exports 23 MTpa of LNG, helping to make Australia the largest exporter of LNG in the world.
Mongolia has much more coal than Queensland and we are seeing evidence of a lot of gas trapped on these coals. Therefore, there is no reason that Mongolia can’t replicate and potentially exceed Queensland as a major producer of coal bed methane.
2. Can you tell us what first drew you to the Jade Gas Holdings Limited project?
What drew me to Jade Gas initially was the TTCBM Project and its potential to provide Mongolia with an independent source of energy, in natural gas, as well as be a part of cleaning up the country’s energy mix.
The TTCBM Project was also well advanced in terms of exploration, with historical work showing the potential for a very large resource. Also, within a few hundred kilometres of the permit, there is a massive energy need, with local operations hungry to transition away from carbon heavy energy sources. Also, the fact the team had been active in the country for many years with great relationships established, is an essential ingredient when operating internationally.
One of the key ingredients in bringing a successful gas industry to Mongolia is the technical know-how that we have in Australia and the learnings from the development of the coal bed methane industry in Queensland. We are exporting our knowledge and technical approach to CBM and schooling up the Mongolians that work for us. For a viable long-term gas industry to be built in Mongolia this transfer of knowledge will be one of the key component parts.
3. Let’s get into the details and update of your project. Can you give us an overview of the Tavan Tolgoi CBM Gas project and some information on the recent drilling results which led you to release a very impressive Contingent Resource of 246 Bcf? And can you tell us where does 246 Bcf put the company?
The TTCBM Project is the flagship project for Jade Gas and one of Mongolia’s key strategic resource developments.
Jade Gas won an international tender for the coal seam gas rights in 2018 and since then has spent less than $10 million to get to where we are today. Jade Gas was listed on the ASX in October 2021 having obtained a 30-year contract over the area, and during 2022 has been very active in the Red Lake field, drilling 11 wells to date and progressing engineering and other studies that will see us production testing in 2023.
The Red Lake wells have delivered an average of 60 metres of gassy coal (comparatively 5 metres can be commercial in Queensland), gas content of 12–18m3/t (in Queensland 5–10m3/t is deemed commercial) and gas composition of 92.5% to 98% methane, which is well ahead of some fields in Australia that have around 60% methane. From these results we booked our maiden unrisked gross 2C Contingent Resources of 246 Bcf, which is a significant booking and one from which we will look to develop a commercial gas field.
The resource released in August of 246 Bcf (gross) is over a small portion of the exploration licence and with the more recent exploration drilling success, we are hopeful the resource will be upgraded over time. However, the contingent resources booked are significant and for context, would be able to supply a large mining operation for decades.
In terms of monetisation, the team is progressing a multitude of commercial pathways. Initially this may involve sales of CNG or LNG to our shareholder and partner UB Metan, which currently imports LNG from Russia for distribution in the capital of Ulaanbaatar. Other opportunities include sales to a number of existing or planned mining operations in the South Gobi region. We may also look at small scale generation at site with power being sold into the grid.
Longer term, there may be the opportunity to sell into the very energy hungry northern region of China. So, no shortage of opportunities and the interest from potential customers is very encouraging so far.
4. Can you give us an understanding of the corporate structure between Jade Gas Holdings Limited, Methane Gas Resource LLC and Erdenes Methane LLC, the SOE and subsidiary of Erdenes Mongol LLC, as well as the importance of these relationships?
Jade Gas is the Australian parent, listed on the ASX, which has a few subsidiary companies in Mongolia. Our main project, the TTCBM Project, is held by Jade Methane LLC, which has 60% of the Joint Venture company Methane Gas resource (MGR). The 40% partner in MGR is a subsidiary of Erdenes Mongol, which is the state-owned entity that manages and oversees all the key strategic resource projects in the country, including the world class Oyu Tolgoi. This shows how highly regarded the TTCBM project is by the Government.
5. Can you tell us the strategic importance of the MOU for offtake with Mongolia’s largest liquified natural gas importer and gas distributor UB Metan LLC?
This is a very important MOU for the company. UB Metan currently imports LNG from Russia in order to meet its customer demand, which is dominated by the bus fleet in Ulaanbaatar. UBM are seeing countless opportunities to expand their gas sales if they had a secure and more readily available source of gas. They already have the infrastructure in place to import LNG and deliver CNG to customers. So, supplying UBM with gas from the TTCBM Project is an easy solution for us once the TTCBM Project starts producing commercial flow rates of gas.
6. Mongolia is currently reliant on coal as its main feedstock for power and is transitioning into renewable energy, how does Jade Gas Holdings play into these developments?
The Mongolian Government is pushing both public and private enterprises to reduce the carbon intensity of the energy supply chain in the country. But it is also recognised that the country is well endowed with high quality coal resources and the coal industry has been a large part of the Mongolian economy for some time.
We are educating the stakeholders that natural gas is a crucial energy source for the transition away from coal fired power, and by having natural gas in the power solution the country is able to support a faster switch to renewables incorporating both wind and solar. Gas in the system will speed up the transition process and will also become a big employer, as a support for renewables, in-country over time.
7. ESG is all the rage right now, how does Jade Gas Holdings work to ensure the company meets its objectives within Mongolia and ASX?
As I mentioned earlier, we, alongside many industry heavyweights, are very clear with our position that bringing natural gas into the power system will facilitate a faster adoption of renewable energy. The reduction in carbon intensity achieved by switching from coal fired power to gas fired power is clear and undisputed. So, for every MW of power used in the country that switches to gas fired power, we will be reducing emissions and supporting the Government’s GHG emissions reduction targets, which will in turn reduce Mongolia’s carbon footprint. Without gas fired power, Mongolia will need to maintain its coal fired power for much longer.
8. The Rio Tinto majority owned Oyu Tolgoi copper & gold mine is a major Mongolian mining project which is looking to reduce its carbon footprint, what impact does this have on Jade Gas Holdings if any?
The OT project is a massive project for the country which employs over 10,000 Mongolians and is expected to operate for the next 30 or 40 years. Rio is a world class operator and over the last few years has been vocal in its desire to reduce its carbon footprint, which is no easy feat given the scale of its global mining operations. The energy demand at OT is significant — and equivalent to the power demand of many Australian second tier cities — and currently Rio is buying power for the mine from the local grid.
Now that we have booked a substantial gas resource within the Red Lake area of our TTCBM Project, the option to acquire a cleaner power supply produced in-country is an enormous advantage to mining operations nearby, both from a cost basis as well as an ESG status. We aim to engage further with all the mining projects in the region to see how the significant Jade gas resource at Tavan Tolgoi can be brought to market in the fastest and most efficient way.
See Memorandum of Understanding signed on cooperation to combat climate change and desertification
9. We noted recently that the first gas flows for Mongolia were achieved. Are we seeing the start of a new industry in Mongolia?
News of early gas flows from coal in the South Gobi not far from Jade’s project were very pleasing. It confirms the view we have held since embarking on this project in 2018 — there is a huge gas resource in the country, and once proved up, will deliver in to a fast-growing market for gas. Mongolia is quite possibly the most exciting place to develop a gas project in the world right now, and at Jade we are hoping to see early gas production from the TTCBM Project in 2023.
10. Jade Gas Holdings provides gas expertise to the Tavan Tolgoi Coal Mine to help Erdenes Tavantolgoi JSC improve safety and environmental credentials. How has that been going for both parties?
The ETT coal mine is one of the largest coking coal mines globally, one of the largest employers in Mongolia, and is considered a highly strategic asset. Through our well-established relationship with ETT, we have put in place a Co-operation Agreement with the coal mine, which incorporates working together to drill wells and analyse the gas components of those wells and the mine itself, to investigate address methane leakage from a safety standpoint for the mine, along with additional commercial opportunities for Jade Gas.
11. There was discussion at a recent mining conference there was a need to build a 500MW gas powered plant near the Tavantolgoi coal mine. Will the gas be supplied by Jade Gas?
Well, given our position immediately adjacent to the mine, and the fact that we have booked a contingent gas resource that could supply such a power project, it would make sense for gas supply to any new gas fired power generation to come from the Jade TTCBM Project. Of course, construction of new power stations takes time, but whether it is a project of this magnitude, or the provision of CNG/LNG for local consumption, we are confident that there is a very robust downstream market on our doorstep.
12. What can we look forward to over the next 12 months, and how can people connect with Jade Gas Holdings Limited to follow for more updates?
We have a lot of activity over the next 12 months, and the excitement will kick-off early in 2023 when we commence our extended production test on the Red Lake area. This test will give us more data on the flow characteristics of the coals which will help our team design the Pilot Program that is expected to start around mid-year.
We are in discussions with a number of parties regarding MOU’s for future gas production. We would like to be a part of an energy solution for mining companies whereby we would provide gas as the baseload power for wind, solar and batteries.
We will have a number of exploration wells targeting the expansion of the TTCBM Project, the Baruun Naran Project, Shivee Gobi and Eastern Gobi. Should we achieve success in these programs then we expect additional gas resources to be booked, which will provide additional options to fast track and expand future commercial production.
How can people connect with Jade Gas Holdings?
You can follow us on the following links:
Website: https://jadegas.com.au/
LinkedIn: https://www.linkedin.com/company/jade-gas-holdings
Twitter: https://twitter.com/jade_gas
Jade Gas Holdings Limited Contact Details
Level 1, 66 Rundle Street
Kent Town SA 5067
Australia
Phone: +61 437 603 294