Carbon Energy Limited (ASX:CNX) Signs First Commercial Contract For Power Generated From UCG
Brisbane, July 17, 2009 AEST (ABN Newswire) - Carbon Energy Limited (ASX:CNX)(PINK:CNXAF) announced today the signing of its first commercial contract in Australia, related to energy generated from the Underground Coal Gasification (UCG) process. This represents a major step forward in Carbon Energy's commercialisation process as it demonstrates that syngas (produced via the UCG process) has the ability to become an important and viable alternative source for Australia's energy future.
Contract with Ergon Energy
Carbon Energy has signed a commercial off - take agreement with Ergon Energy, a Queensland Government owned electricity provider.
The contract is worth approximately $2million per year and is for electricity produced at Carbon Energy`s 5MW syngas-powered electricity production facility, currently being constructed at Bloodwood Creek in the Surat Basin.
The first electricity is expected to flow into the local grid by the end of this calendar year. The planned facility will generate enough power to supply approximately 4,000 homes per year.
Carbon Energy sees this contract as a major step forward in the company's commercialisation plans as it enables the company to monetise a very small part (0.5 PJ per annum) of its massive 7,750 PJ (syngas) recoverable energy.
The contract follows the success of Carbon Energy's world-first trial of the (UCG) technology developed in conjunction with Australia's CSIRO. "The establishment of the 5MW station is a major step towards full commercial production, said Managing Director Mr Andrew Dash. However, it`s really only the first step. We intend to move forward quickly with plans for an additional 20MW power station at the Bloodwood Creek location in 2010.The 5MW we see as mainly a proof of concept for power generation, and the experience gained will assist with the planned 20MW expansion.
Carbon Energy will utilise its experience from the delivery of the planned 5MW and 20 MW stations in Queensland for future projects both in Australia and overseas in key markets such as India and the United States.
Carbon Capture and Storage
Carbon Energy is currently evaluating a number of alternatives for Carbon Capture and Storage and plans for the additional 20MW power station will allow the company to demonstrate Carbon Capture and potentially carbon storage (CCS).
The UCG process can reduce clean coal power generation costs by between approximately 30 % and 50% and deliver a more environmentally friendly method of power generation than the traditional coal fired plants currently in operation.
Mr Dash noted "the reason we have such a competitive advantage in this space is that clean or low emission coal technologies typically depend on digging coal out of the ground, transporting it ,then gasifying it above-ground prior to Carbon Capture. The UCG process eliminates the first 3 steps, including all the associated costs, because it already converts the coal into a gas underground."
Carbon Energy expects to successfully conclude its discussions with potential Partners within the next few months. It is proposed that these Partners will provide both technology expertise and access to market opportunities. this together with positive support from Government (both State and Federal), offers the very real prospect that Carbon Energy will be among the first Australian companies to deliver a` Clean Coal Project`.
About ERGON Energy
Ergon Energy is a Queensland Government owned corporation that operates the electricity distribution network in regional Queensland ,servicing an area over 1 million square kilometres, with more than 4,500 employees.
It has assets of more than $7.5 billion and powerlines stretching over 150,000km supplying electricity to more than 650,000 residential and business customers.
About Carbon Energy Limited
Carbon Energy (ASX:CNX) (OTCMKTS:CNXAY) is building a gas business, utilising its unique keyseam technology.
The Company is committed to providing industrial gas users with an affordable and secure source of high quality feedstock, as gas prices remain strong, through increased demand across our key markets.
Carbon Energy is the only company to complete a full-lifecycle, commercial scalable underground gasification trial. The Company's keyseam technology has successfully accomplished all the recommendations outlined by the Queensland government's Independent Scientific Panel (ISP) which included intense, independent environmental scrutiny.
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