Petroleum Authority of Mongolia has signed an exploration contract with Storm Cat Energy Corp., Calgary, to assess coalbed methane potential near Ulaanbaatar.
The contract requires that Storm Cat spend $300,000 on exploration by Dec. 31, 2005, on 5.5 million acre Tsaidam Block XXVI, which contains more than 500,000 acres of geologically mapped coal deposits. The work program is for a minimum of three wells that would be drilled to about 600 m.
Then the company has until June 30, 2006, to enter into a production sharing contract. Such a contract would be similar to the agreement that governs Storm Cat's Noyon project in the South Gobi desert signed last April. The company has drilled eight 150-m stratigraphic tests to Permian coals in the Nariin Sukhait region on that block. More wells will be drilled shortly to 900 m using a larger rig.
CBM would back out high sulfur lignite, energy source for Ulaanbaatar, home to half of Mongolia's population.
The company is pursuing CBM opportunities in western Canada and the US.
