Linc Energy's gas-to-liquids coal successFont Size: Sarah-Jane Tasker | October 15, 2008 LINC Energy has turned on the taps at its gas-to-liquids project in Queensland with the first trickle of fuel flowing yesterday, in a move the company describes as a world first.
The project at Chinchilla, northwest of Brisbane, involves the introduction of underground coal gasification (UCG) synthesis gas into a reactor that then produces high-quality synthetic fuel.
Chief executive Peter Bond said his team had been working towards the gas-to-liquids (GTL) goal for the past two years.
"Linc Energy has now proven that it can produce liquid fuels from UCG gas. This process provides the potential for billions of tonnes of stranded coal resources to be converted into transport fuels in an environmentally acceptable way," he said.
The news sent Linc shares soaring 30.94 per cent in early trading, before it settled to close 15.63 per cent higher at $3.70.
Mr Bond said it was a significant milestone to achieve the goal in two years. "It is a great outcome and a world first to take the gas from the coal and put it through a plant and turn that into hydrocarbon fuels," he said.
"We are comfortable that by the end of the year, we will be able to join the dots to the next steps and move towards commercialisation."
BBY analyst Jeremy Tobias said the production of the first liquids verified that the company could achieve what it had set out to, dispelling any doubt the market had on the process.
"A lot of investors were waiting and were sceptical, but they have shown their stage one business model is achievable," Mr Tobias said. "It is the biggest milestone for the company since its listing and will fuel further growth aspirations both domestically and internationally."
Linc will refine and improve the process, with the aim of having enough stock by the end of the year to start conducting trials on the product.
The experience gained will assist with finalising the engineering scope for the company's proposed 20,000 barrels-a-day commercial facility, which is planned for construction in the next 12 months.
Linc's quest to spread its UCG technology around the world has also gained momentum.
Vietnam's largest coal producer, Vinacomin, has signed a business co-operation contract with the Queensland GTL hopeful and Japan's Marubeni to extract gas from Vietnam's Red River Delta Basin.
The companies will start gas production on a trial basis from early next year using Linc's UCG process.
Last month, Linc launched into the Chinese market, with its new Chinese partner, Xinwen Mining Group, to develop UCG and GTL projects in the Yining mining area.
That move followed an announcement that Xinwen had bought Linc's Teresa coal exploration permits in Queensland's Bowen Basin for $1.5 billion, a deal expected to be finalised in the coming weeks.
Mr Bond said the Vietnam Government was keen to expand its energy independence and understood the benefits of UCG.
He said that before the end of the year there would be further news flow from the company, similar to its recent international announcements.
LNC Price at posting:
$3.70 Sentiment: Buy Disclosure: Held
