Drilling is underway at Elixir Energy Limited’s (ASX:EXR) 100% owned Nomgon IX coalbed methane (CBM) production sharing contract (PSC).

Located in the South Gobi Desert in Mongolia, immediately next to the Chinese border, Elixir’s Nomgon IX CBM PSC covers an area of around 30,000km2 (over 7 million acres). This is a region that is exceptional in its combination of massive potential gas resources, minimal competing land uses, and a location right in the heart of Asia. Elixir’s PSC is exceptionally well placed to supply China, being just 410 kilometres from China’s East-West Pipeline.

China is experiencing a rapid rise in gas demand driven by air quality concerns in its major cities and legislative changes resulting in a large scale switch from coal to gas, along with an increase in renewable energy. Yet China is unable to produce enough gas, forcing it to import to meet domestic demand. This shortfall is being met by pipeline imports from Central Asia and Myanmar, as well as more pricey LNG imports along the coast.

The PSC has a “giant prospective gas resource” with an unrisked best case recoverable prospective resource of 40.1 Tcf, and a risked best case resource of 7.6 Tcf.

The current drilling program will see Elixir drill two fully tested core-holes and it has the option for a third. (source: https://www.sharecafe.com.au)