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Tlou delivers positive update for Lesedi CBM project (TLOU)

Tlou Energy (LSE:TLOU) sat at 6.35p on Wednesday after revealing a positive progress update for its Lesedi coal bed methane (CBM) project in Botswana.

The firm, which focuses on using delivering gas-to-power solutions alleviate southern Africa’s chronic power shortage, the project’s Lesedi 4 pod has reached critical desorption pressure (CDP).  CDP is the pressure at which gas begins to come out of coal following a dewatering process. Now this has been achieved, Tlou said gas is ‘steadily building pressure’ inside Lesedi 4’s closed casing.

Meanwhile, the business said a short-term gas flow test at another pod called Lesedi 3 carried out after significant pressure build-up yielded positive results. Since the trial, dewatering has continued with the plan to hold the water level just above the coal and continue to draw down pressure in the well.  It is hoped that this approach will allow gas to flow in a controlled manner, ideally leading to a long-term gas flow from the Lesedi 3 pod.

Pods at Lesedi consist of a single vertical production well that is intersected by two lateral or horizontal wells. The two wells then drill through a gassy coal seam, where gas is extracted, gathered, and used for production.

Tlou’s managing director Tony Gilby said: ‘We are very pleased to have now reached CDP at both the Lesedi 3 and Lesedi 4 production pods. The short-term gas flow test at Lesedi 3 has also been positive, and with the primary objective of demonstrating a commercial gas flow rate, we look forward to further testing at both Lesedi 3 and 4.  Further updates will be provided in due course.’

The news comes just weeks after Tlou confirmed that the government of Botswana had chosen it as a preferred bidder for the development of the plant which will output up to 100MW of power.

The submitted proposal included a staged development plan commencing with up to 10MW of generation as well as outlining project feasibility, proposed field development, installation of power generation facilities and supply of power into the grid in Botswana.   If the initial project is successful, the firm will look to expand further.

At the time, Tlou said the news was ‘an enormous step forward for the company in the development of the Gas-to-Power project’. It also estimated that the initial 10MW project could generate gross revenue of approximately $10m per annum.

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