Neil Young is managing director of Elixir Energy, an ASX-listed junior gas explorer focused solely on Mongolia. The company owns 100% of a very large coal bed methane (CBM) license of a massive 7 million acres in size, located in the heart of East Asia, just north of the Chinese border. With 25 years of experience in the energy space and nearly a decade of expertise focused on CBM exploration in Mongolia, Neil leads the first company to explore for CBM in the country.
As Elixir Energy now accelerates its pursuit of potentially trillions of cubic feet (TCFs) of gas, Neil sat down with us to share the details of how this Australian company came to be the pioneers of CBM in Mongolia, what this means for investors, and what the future holds with China’s demand for gas expected to skyrocket over the coming decades.
This is an exciting year for Elixir Energy, with the discovery of the first CBM in Mongolia. Why did you choose this area to explore?
The idea that CBM could be present in the region first occurred to me in 2011, when Mongolia started delivering coal to China—by truck. At that time, Australia was emerging as a major CBM exporter to China. It struck me that if there’s a lot of coal there, then that tells me that methane should be there, too—but no one was exploring for it. So, we went to the country to see if we could secure the license to do that. It took us more than seven years of negotiations and building relationships with the Mongolian government to execute the PSC, which we signed in late 2018. I co-founded a private company a decade ago specifically to conduct exploration for CBM in the region, and we back-door listed that into Elixir in late 2018 and started drilling operations less than a year later, in September of 2019.
How does your long career in the energy space play a role in your successfully overseeing an undertaking of this size in another country?
I’ve had a variety of experiences working for very large and very small companies. Each requires different skills, but all require EQ as well as IQ in terms of working with other people to do deals and achieve new things, rather than just occupy an office.
For our Mongolian operation, the key team is in-country, which includes a core team of employees, people I’ve known for many years, and when drilling, we hire local companies to do it. My many years of journeying to the country and building up relationships have provided the firm foundation of a very good local team that has allowed us to get on with work even during COVID because the capability and expertise are there, the trust is there.
With China’s rapid increase in its energy demands, what could the discovery of trillions of cubic feet of gas mean for the region?
Right now, China is currently unable to produce enough gas to meet its demand, and it has been forced to import gas from many other countries. When its demand explodes in the coming years, these imports will have to skyrocket. While it will take many years to discover and prove up, if our aspirations for this size of gas are realized, it could support all of Mongolia’s needs and underwrite the building of a new pipeline to export that gas to China — just a few miles away in gas terms. This would be a highly attractive source of gas for China given its immediate proximity.
Finally, tell us what your ultimate goals are for both Elixir and your investors.
Small entrepreneurial endeavors, start-ups such as ours, make the discoveries, and then massive companies take over and develop them. Our job is to deliver that opportunity, and to thereby create substantial returns for our investors by de-risking the asset and making it attractive to a company who can handle the subsequent long-term production phase. That is our goal.
Managing Director — Elixir Energy