Press Releases

Brisbane, June 29, 2009 (ABN Newswire) - Linc Energy Limited (ASX:LNC)(PINK:LNCGY) announces that it has made further significant progress in demonstrating the combination of its Underground Coal Gasification (UCG) and Gas to Liquids (GTL) technologies.

During the first half of 2009, the demonstration GTL plant has undertaken four major production campaigns each of which has seen further improvements in plant performance. The demonstration plant has now operated over extended periods with the anticipated levels of reliability.

Production campaigns in February, March, April and May have all been successful in demonstrating further performance improvements with the UCG to GTL facility whilst at the same time validating key technical parameters.

The May campaign has been the most successful operation to date producing high quality synthetic hydrocarbon products over the entire operating period.

It is important to reflect on what Linc Energy's early goals were from its UCG to GTL facility and how well those key goals have been achieved. Linc Energy's first goal was to prove UCG syngas was suitable as the only feedstock into a GTL Fischer Tropsch (FT) plant. Now this has been proven, Linc Energy can now use this abundant and relatively cheap gas to make synthetic liquid hydrocarbons (with a focus on diesel).

This first objective has now been achieved with first liquids being produced in October 2008 and together with significant improvements in operations over these past few months, any question as to whether Linc Energy can produce GTL synthetic liquid hydrocarbon products (like diesel and jet fuel) from UCG syngas, can now be answered with a definitive yes.

Importantly, Linc Energy's GTL facility has continued to demonstrate that it can effectively clean UCG synthesis gas to the high levels of purity required for FT synthesis. The quality parameters include sulphur concentrations that are consistently below 50 parts per billion. Gas quality is validated by reliable on-line sulphur and oxygen analysis, the latter confirming effective control over residual oxygen levels down to parts per million.

It is worth noting that Linc Energy's achievement to produce clean UCG gas for the FT reaction means that its UCG gas can be used in a number of other commercial applications requiring quality clean gas, for example chemical and fertiliser production.

The technical achievement with the synthesis gas cleaning has been matched with ongoing improvements in FT synthesis operations. The FT catalyst reduction process has been enhanced with resulting improvements over successive production campaigns in catalyst activity and CO and H2 conversion. This has resulted in increases in production rates in the GTL plant.

Importantly, Linc Energy's investment in its Research Laboratory capability at Chinchilla is also providing significant assistance in the development of the Company's technologies. In particular, laboratory scale FT reactors have confirmed over prolonged periods that excellent H2 and CO conversions (above expectations) can be achieved. This UCG synthesis gas is drawn directly from the pipes of Linc Energy's GTL operating plant at the inlet to the GTL plant reactor, giving Linc Energy the ability to run the Laboratory's reactors on real time with identical gas that is being fed to the main reaction. This has provided Linc Energy with an ability to forecast and test various areas of performance that is beyond the capacity of most other operations.

The Chinchilla Laboratory results, and other testing and optimisation work related to catalyst reduction and operation carried out by Linc Energy and our core FT catalyst supplier Süd-Chemie, are providing clear evidence that further performance improvement of the GTL plant will be made in the near future.

The next stage of improvement work will again focus on increasing catalyst activity in the demonstration plant thereby increasing CO and H2 conversion and subsequently increasing production rates. The increases planned in CO and H2 conversion will result from further improvements in the catalyst reduction process and in reactor temperature management, the improvement in the actual catalyst utilised in the reactor will only add to the potential increase in production rates.

The pace of Linc Energy's GTL technology development will not slow. Work to further improve the plant catalyst reduction system is well underway. A program of FT catalyst improvements and performance tests at laboratory scale (both in-house and external) is also being expanded with the results from this work being used as a key input to conceptual engineering.

In announcing these results, Linc Energy's Chief Executive Officer Mr Peter Bond commented that "We have made fantastic progress at the Chinchilla GTL facility this year. My aim was to prove that we could take UCG gas and turn it into liquids and we've done that. The next goal is to refine and capture this knowledge and design and build a 20,000 barrel per day commercial GTL facility and that goal is progressing according to plan."

"One crucial point also achieved is the continued improvement of Linc Energy's UCG program. As Linc Energy refines its GTL operating experience, its intellectual property and knowledge base which has been developed for GTL, the consequential improvement of its UCG operations has been quite significant."

"Linc Energy's knowledge upon areas like gas quality and control, well spacing, air injection, liquids handling and monitoring have all improved due to the learnings gained by producing UCG gas for the GTL facility. This is now being applied to our 4th generation UCG generator. There is simply no other company in the world with that sort of experience or knowledge."

"Linc Energy is entering an exciting stage over the coming months where we are aiming to expand our operations into a number of commercial geographic areas like South Australia, Vietnam and North America as well as completing GTL engineering design and selection work for the 20,000 barrel per day commercial UCG to GTL facility. Linc Energy has only just begun and you just can't help but be excited by that."

Contact

Mr Peter Bond TEL: +61-7-3229-0800