Carbon Energy Limited (ASX:CNX) Media Release: Signs First Commercial Contract With Queensland's Ergon Energy
Brisbane, July 17, 2009 AEST (ABN Newswire) - Carbon Energy Limited (ASX:CNX)(PINK:CNXAF) has signed a commercial off-take agreement with Queensland Government owned electricity provider Ergon Energy.
Carbon Energy sees this contract as a major step forward in the company's commercialisation plans for three reasons:
1. This is one of the first projects in Australia to generate revenue from the Underground Coal Gasification (UCG) process.
2. Carbon Energy demonstrates that syngas (produced via the UCG process) has the ability to become an important and viable alternative source for Australia`s energy future.
3. This contract enables the company to monetise a very small part (0.5 PJ per annum) of Carbon Energy`s massive 7,750 PJ (syngas) recoverable energy.
The contract, worth approximately A$2 million per year, 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 planned facility will generate enough power to supply approximately 4000 homes per annum with the first electricity expected to flow into the grid by the end of 2009.
The contract follows the success of Carbon Energy's world-first trial of the (UCG) technology developed in conjunction with Australia's CSIRO.
"This is an exciting time for Carbon Energy," said Managing Director Mr Andrew Dash.
"The establishment of the 5MW station is a major step towards full commercial production.
"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."
"We see the 5MW as a proof of concept for power generation, and the experience gained will assist with the planned 20MW expansion.
"Importantly, our plans for the 20MW station will allow Carbon Energy to demonstrate Carbon Capture and potentially Carbon storage (CCS)."
Mr Dash explained that Carbon Energy is currently evaluating a number of alternatives for Carbon Capture and Storage.
"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, so our major advantage is that as the UCG process already converts the coal into a gas, it eliminates the need for the first three steps," said Mr Dash.
"The result is that the UCG process can reduce clean coal production costs by between approximately 30-50% and deliver a more environmentally friendly method of power generation than the traditional coal fired plants currently in operation.
"Subject to successfully concluding our current partnering discussions and positive support from Government (both State and Federal), Carbon Energy could be among the first Australian companies to deliver a` low emissions' Coal Project".
The completion of the 5 and 20 MW power facilities are key steps to the realisation of the companies vision for regional south east Queensland. The vision will see Carbon Energy and our partners build a large scale low emission power generation plant, plus a gas processing facility to produce synthetic natural gas and chemicals such as ammonia as well as transport fuels.
"From a Queensland point of view, our power generation project supports the State Government's aim of additional generation capacity being provided by the private sector. Additionally we will be creating jobs which will help the local economy."
Mr Dash said that 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 the United States.
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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