Brisbane, Nov 19, 2008 AEST (ABN Newswire) - Linc Energy Ltd (ASX:LNC)(PINK:LNCYF) today announced that it will be committing to develop its first commercial Underground Coal Gasification (UCG) to Gas to Liquids (GTL) operation in South Australia upon the SAPEX areas which it recently acquired.
The decision is made on the back of a number of primary drivers:
Economies of Scale
- The Arckaringa Basin as one of the largest contiguous coal basins in Australia and indeed the world. Due to the size of the coal resource, Linc Energy believes that it can support a UCG to GTL (Coal to Liquids) business that would include several 100,000 barrel per day facilities. These facilities would be situated so as to create additional value through location and other synergies.
- Linc Energy has already signalled its intention to develop a number of oil and gas opportunities in the Arckaringa Basin and as such, this provides additional synergy and economy of scale opportunities.
Infrastructure
- The Arckaringa Basin area has good access to existing rail and port infrastructure that will assist with movement of materials and product for a business of this significance. This infrastructure will more readily support the larger volumes of product contemplated by way of the economies of scale generated.
Resource Access
- The Arckaringa Basin area has no relevant overlapping tenement issues as the operation of UCG is completed under petroleum tenements in South Australia and Linc Energy currently holds PEL’s (Petroleum Exploration Licences) over its acreage in the Arckaringa Basin.
- The land areas targeted are flat and accessible and provide more flexibility when planning and constructing UCG operations and related GTL facilities.
Linc Energy will continue to operate and expand its Chinchilla (Queensland) UCG to GTL demonstration facility for at least the next 3 to 4 years whilst commercial operations are developed in South Australia. The development work being done at this facility remains unparalleled in the industry and has direct relevance not only to our plans for South Australia but will allow Linc to quickly apply its technology in other locations in the world.
Linc Energy believes its Queensland assets, particularly at Chinchilla, are still very much integral to the company and its future success. Linc Energy remains committed to eventually developing a commercial UCG/GTL operation in Queensland at some point in the future.
This decision to locate in the Arckaringa Basin will, above all else, allow Linc Energy to meet the commitment it has made to its shareholders to develop a commercial UCG/GTL business in the shortest possible time. This and the other drivers outlined will ensure that this decision creates significant value for Linc's shareholders.
Linc Energy's commitment to environmental excellence will be maintained as the transition is made to South Australia. With over 10 years operating experience in Australia, Linc Energy has a substantial base of environmental monitoring data that supports the environmental credentials of UCG being one of the cleanest and simplest ways of converting coal into clean energy. When coupled with the environmental benefits of the synthetic fuels produced, Linc is one of the only companies in the world that can covert a tonne of coal into 1.5 barrels of diesel (oil) and do so with a lower greenhouse gas footprint than that of the traditional oil industry (refining). This achievement is exactly what state and world governments are seeking in answering the question of 'how do we as a country secure our energy (oil) future, yet reduce the current greenhouse gas footprint produced from traditional oil'.
A number of relevant project services will be moved or established in South Australia over the coming weeks and months. Linc Energy will however continue to maintain its corporate office in Brisbane to support engineering activities and the Chinchilla demonstration facility. This decision will also create significant employment opportunities in South Australia, particularly in the technology development, engineering and construction fields.
Mr Peter Bond, Linc Energy's Chief Executive Officer said, "Linc Energy knew the acquisition of SAPEX was exciting, prudent and well timed when we made it. We always knew the potential for the SAPEX leases was huge and on the back of purchasing this asset and gaining the insight of just how potentially big it is, it makes every sense to now fast track this SAPEX area into the first commercial UCG to GTL operation. The SAPEX area also opens up a host of potential interconnecting profit centres"
"In addition, the lack of overlapping tenements as an issue in South Australia is an attractive point but not the only point. The South Australian Government and their Mines & Energy Department (PIRSA) has also been very supportive and I personally look forward to being able to add Linc Energy's very significant project to the South Australian economy. I believe its worth reflecting on just how big is 'big' when we talk about the coal areas Linc Energy has access to in South Australia. In terms of coal to liquids production, Linc Energy has initially located at least 8 to 10 key areas capable of operating a 100,000 (one hundred thousand) barrel UCG to GTL facilities for approximately 60 years continuously. That's over 1 (one) million barrels a day of oil (diesel or jet fuel) production for approximately a generation. And Linc Energy, via its work at Chinchilla and elsewhere, has the capability of unlocking this vault of energy via UCG to GTL. But Linc is not talking about reinventing the 20,000 barrel facility we've initially developed. We are literally just going to layout multiple modules of the same 20,000 bpd facility to save time and money."
"I'd also like to reiterate Linc Energy is not abandoning Queensland or Chinchilla. In fact, Chinchilla will remain the centre of development and research for UCG and GTL for the Company and the world for many years to come. Our Queensland assets are still very important to us for many reasons as we still have a number of key coal assets like "Emerald" and "Pentland" which are currently being sold and as intimated, our UCG assets like Chinchilla remain very important development opportunities in the future. The idea of a 20,000 barrel a day UCG to GTL facility at Chinchilla is a project not that far into the future and is a project Linc Energy will gladly pursue when the time is right. In the meantime, the SAPEX South Australian areas are the most exciting opportunity I believe I've ever seen and as such, I owe it to my shareholders to get a UCG to GTL commercial operation up and operating profitably and quickly in South Australia".
Linc Energy will commence moving additional drilling equipment and some engineers to South Australia within the next four weeks. Linc expects to make another significant coal JORC resource announcement, which will include further developments on its oil exploration program before Christmas this year.
For further information please contact Peter Bond.
Contact
Information for Media:
Mr Peter Bond
Chief Executive Officer
Phone: +61 7 3229 0800
E-mail: pab@lincenergy.com.au
ASX Contact:
Mr Craig Ricato
Company Secretary
Phone: +61 7 3229 0800
E-mail: cr@lincenergy.com.au
Information for investors:
Ms Janelle van de Velde
Manager, Corporate Services &
Investor Relations
Phone: +61 7 3229 0800
E-mail: jcv@lincenergy.com.au
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