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Elixir Power Ltd (ASX:EXR) may be very nicely positioned to profit from Mongolia’s and China’s decarbonisation insurance policies because it ramps up plans to arrange Mongolia’s first gas-fired era plant within the South Gobi area utilizing pure fuel, and on the identical time develop the area’s first inexperienced hydrogen challenge.
The fuel exploration and growth firm has already achieved progress on a number of fronts for its inexperienced hydrogen challenge – Gobi H2 – together with the latest signing of a memorandum of understanding (MoU) to assist challenge finance with the Mongolia Inexperienced Finance Company, a joint-public-private sector physique.
It has additionally submitted an in depth evaluation of the authorized points surrounding a possible inexperienced hydrogen challenge in Mongolia to the Ministry of Power, which concludes that no new main laws is required for the event of inexperienced hydrogen initiatives in Mongolia.
Elixir can also be confirming the bankability of the renewable energy inputs for inexperienced hydrogen manufacturing and has procured professional water advisory companies, with potential water sources for the pilot H2 challenge already recognized.
The corporate lately lodged plans for its long-term coal-bed methane (CBM) pilot manufacturing testing challenge with the Mongolian petroleum regulator as a part of the necessary annual budgetary approval course of.
Elixir Power is at present primarily targeted on an exploration and appraisal program in Mongolia concentrating on pure fuel within the type of CBM, also referred to as coal seam fuel (CSG) in Australia. Extra lately it has developed the Gobi H2 inexperienced hydrogen challenge, in the identical space of operations as its CBM enterprise.
First mover benefit
Elixir Power has named the inexperienced hydrogen challenge the ‘Gobi H2’ challenge and is making use of for a Mongolian trademark for the title.
Elixir managing director Neil Younger mentioned: “All of the work we’re doing on our Gobi H2 challenge serves to strengthen our authentic beginning idea: the nation is a possible tier-one location for giant scale hydrogen exports.
“Elixir’s first-mover benefits are being progressively locked in and it’s implausible to see the quickly rising curiosity on this future-facing trade from a number of native and worldwide stakeholders.”
Investor of the 12 months for second consecutive 12 months
Elixir Power bagged the ‘Investor of the 12 months 2021’ award by Mongolia’s Minister of Mining and Heavy Trade, making it the second 12 months in a row the corporate has been recognised for its efforts.
Elixir’s Younger mentioned: “It’s a nice tribute to our native workers and contractors that we’ve got but once more been formally awarded as ‘The Investor of the 12 months’ by the Mining Minister.
“This recognises their nice resilience in not simply sustaining, however actually vastly growing, our exploration and appraisal efforts, however all COVID has thrown at them.
“We sit up for much more progress in 2022 as we undertake Mongolia’s first sustained manufacturing pilot program and proceed our ‘rinse & repeat’ mannequin of including new coal- bearing sub-basins to our stock.”
2021 drilling program wrapped up
The corporate’s 2021 drilling program has been wrapped up, with the next outcomes:
➢ The Nomgon-7S nicely has been efficiently drilled and suspended as a strain monitoring nicely for subsequent 12 months’s manufacturing pilot within the Nomgon sub-basin;
➢ The Richcairn-4 appraisal nicely reached a complete depth of 560 metres and encountered 20 metres of coal and 6 metres of silty coal. Additional appraisal work shall be undertaken within the Richcairn sub-basin in 2022; and
➢ The Bag-1S exploration nicely reached a complete depth of 779 metres however didn’t intersect coal.
Elixir’s closing 2021 drilling program comprised 17 wells of which 65% efficiently intersected coals within the CBM window.
Seismic acquisition program
Elixir’s 2021 2D seismic acquisition program within the South Gobi has been wrapped up as deliberate.
A complete of 528 kilometres was acquired in a two-stage program that required 123 days of discipline operations – a program of report dimension for the area.
The info is now being processed and interpreted and is feeding into lead era for 2022’s drilling program.
Nomgon CBM challenge
Elixir Power is primarily targeted on its 100%-owned Nomgon IX CBM manufacturing sharing contract (PSC) challenge within the South Gobi area of Mongolia.
The Nomgon Undertaking licence space covers round 30,000 sq. kilometres and is on the Mongolian Chinese language border, with glorious infrastructure, mines and deliberate pipelines. It’s round 400 kilometres north of China’s predominant fuel transmission grid.
This very giant space has been independently licensed to include a large CBM risked recoverable potential useful resource of seven.6 Tcf (finest case).
2022 ahead program
After almost 300 days of continuous drilling undertaken in 2021, there shall be a brief hiatus within the discipline, while the necessary annual regulatory processes for the 2022 program are underway.
These embrace:
➢ The corporate’s exploration drilling tendering course of has closed and a variety of bids are at present being evaluated.
➢ The pilot drilling tender remains to be open and up to now a variety of firms have informally expressed their curiosity. The award of the contract, which is able to contain the regulator, is predicted to be handed out subsequent month.
➢ The corporate’s at present open seismic tender has additionally attracted a number of casual expressions of curiosity. The tender will shut imminently and is predicted to be awarded subsequent month.
➢ Normal discussions are underway with the petroleum regulator over the formal 2022 price range.
➢ Key lengthy lead gadgets for the pilot manufacturing program have lately been ordered.
Approvals from the petroleum regulator are anticipated to come back by way of in February, adopted by annual sign-offs from the Surroundings Ministry.
Last approval, relying on developments on the COVID-19 entrance, ought to be forthcoming within the first half of March.
Chinese language fuel markets
The corporate famous that the de-carbonisation efforts in China are actual and reasonable, with the safety of provide arguably much more vital than the worth, as proven by the present exceptionally excessive Asian fuel costs being paid by China.
China has already been actively lowering the carbon depth of its financial system, with the neighbouring province of Inside Mongolia altering its coal-heavy power combine.
China has been accelerating its personal hydrogen developments and in the long run is more likely to flip to imports.
Moreover, Russia’s growing fuel provide leverage over Europe has not gone “unnoticed” by China, Elixir famous.
Aggressive benefit
Round two-thirds of the price of producing inexperienced hydrogen is the price of renewables.
Delivery hydrogen by boat prices multiples of delivery the identical power as methane.
The delivered value of hydrogen is, due to this fact “all concerning the high quality of renewable power and the price of supply”.
Entry to markets by pipeline is massively advantaged over seaborne provides and Mongolia can provide hydrogen to the Chinese language markets this fashion.
New enterprise alternatives
Like many different oil and fuel firms, Elixir has rigorously thought-about what new enterprise alternatives the power transition may supply it that benefit from its current skillsets and don’t current a price harmful distraction.
As the primary mover on this space, the corporate signed a MoU with Mongolia’s Ministry of Power to work with it in exploring hydrogen alternatives and different stakeholders are additionally being progressively engaged.
Within the meantime, it’s garnering bankable high quality renewable useful resource information within the area from its SODAR gear.
Its desktop evaluation has concluded that the mixture of wind and photo voltaic sources within the Gobi area is outstanding – and the locational benefits this area brings by way of instant proximity to Chinese language metal mills, for instance, ought to place inexperienced hydrogen produced within the globally lowest delivered value class.
Professional water advisory companies
Elixir has labored with Mongolian drilling firm ErdeneDrilling LLC for a variety of years on the CBM drilling entrance.
Though water is just not a big a part of the associated fee buildings of manufacturing inexperienced hydrogen, it’s a important enter and the social points surrounding it are a key precedence.
Elixir’s CBM enterprise, the place producing water is a essential a part of fuel manufacturing from coal seams, offers complementary areas of experience and even potential H2O feedstock for the Gobi H2 challenge.
Elixir and Mongolian drilling firm ErdeneDrilling LLC have lately formalised their relationship over procuring water for hydrogen by way of an settlement for the supply of water advisory companies.
The events are at present planning field-based water exploration and appraisal actions for later within the 12 months.
Renewable sources
Apart from water, the opposite key enter for a inexperienced hydrogen challenge is high-quality renewable energy sources, which desktop evaluation signifies are of worldwide very top quality within the Gobi area.
On this entrance, Elixir is at present:
➢ Measuring wind and photo voltaic sources to a bankable customary by way of its Australian sourced SODAR unit imported to the nation final 12 months and deployed within the South Gobi area; and
➢ Importing a photo voltaic targeted measurement instrument (from the identical Australian agency who equipped the SODAR – Fulcrum3D) to be deployed at its lately acquired Photo voltaic Ilch photo voltaic farm.
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