Hi fellow members of the action group, Can you please comment on the following draft letter to the some media outlets and journalists? Please alter, correct or add to. I am no journalist, however i feel the research content is solid. What do you think? Please use freely, there is no copyright!
Dear ---------, I am part of a concerned action group of shareholders and supporters of Cougar Energy (ASX listed - CXY).
I am writing to attract the attention of journalists and the media regarding the grossly unfair treatment by DERM (Dept of Energy , Resourses & Mining - QLD), of this very innovative Australian Company. We feel that the handling of CXY's proven UCG plant in Kingaroy by DERM has been a disgraceful fiasco which demands publc scrutiny.
Sure I may be seen as a whinging shareholder who has lost a load of money on paper, but I am here witing in the defence of THE true Australian spirit of a 'fair go for all" That is the essence of the argument, because i am writing to you to present the proven facts.
Here is some background information of CXY. CXY uses a UCG process which they have the exclusive license for in Australia. The UCG process was developed and is owned by ERGO EXERGY (see www.ergoexergy.com). ERGO have many projects being constructed around the world at the moment. They have a successfully operating project in South Africa today, as well projects being constructed in Canada and New Zealand. The UCG process converts the coal underground into a gas which can be used for electricity. There are also by-products such as creosote produced.
So here is summary of events since 2010 to today:
CXY had invested already $25,000, 000 over the past 3 years to develop the state-of-the-art trial plant. It is the 2nd most advanced plant in the world. They had already completed a another successful trial burn in Chinchilla QLD. It was a technical tour de force by any standards, and has been forgotten. The Kingaroy plant was a great success, until it was closed by DERM. It was also contributing to the economy of Kingaroy, which is an energy hub of QLD as it is the home of the Tarong Power Station. Tarong by the way, is also the 2nd most highest polluting coal fired power stations in the the country. CXY intentions once the plant was given the Govt final approvals was to build a 400MW power station, to contribute to QLD's huge energy demand. It was to to procduce a 1/3 of the power of Tarong, but it was going to be alot cleaner, with very low CO2 emissions.
There are 3 other UCG companies in QLD that were given permission by the QLD Govt to trial there UCG processes. CXY was the most advanced of these companies with proven & superior UCG technology, however CXY were still awaiting MDLs (Mineral Development Licenses) fianl approval. (see attached QLD Govt doc - UCG Policy 18 February 2009) It is very interesting to note that in the UCG Policy document it states clearly that "the intention to allow UCG technology to be seriously considered, while minimizing the impact on prospective investors in coal seam gas (CSG) production liquified natural gas and other purposes". This proves to me that the CSG industry is the Government's darling.
The CXY flagship Kingaroy plant was closed down in the middle of 2010 to the dismay of investors and local Kingroy supporters when a water sample from the monitoring bore returned a very high BENZENE reading, above Australian drinking standards. This was later proved to be a mix up at the independent lab and cleared by DERM as a mistaken sample. It was too late, because this however had given the Local Farmers reason to lobby the community against the Kingaroy plant, based on this incorrect toxic ground water sample. Even though the sample was proven to be a mistake, CXY was still shut down until the results of DERM 's full investigation and Independent Scientific Panel (ISP) report were completed by the 17 January 2011. In the ISP Summary Report on DERM Environmental Evaluations - Cougar Energy (see attached document), on p.4 it states: "No Benzene or Toluene was detected in surrounding bores and water systems following extensive survey conducted by DERM. However, in a sample submitted by Cougar on the 28 October, a benzene concentration of 45 micrograms per litre was found in borehole T5058. This is above the trigger level of 1 microgramper litre." This finding is very strange because it contradicts announcements made to the market by CXY, and the ISP have quoted a different unit of measurement than the PARTS PER BILLION unit of measurement which was always used in reports to the market. It seems as though the ISP has not been given the appropriate information. CXY collected hundreds of samples from monitoring bores on the site and neighbouring farmers bores. In a ASX statement to the market on 22 November 2010, CXY describes the extent of the monitoring:
Since April 2010 Cougar Energy has been conducting intensive and continuous groundwater sampling and testing at Kingaroy after the initiation of the pilot burn earlier this year for the following results:
Water bores operated by local farmers
? 23 bores located 1.3 to 4.2 kilometres from the pilot burn have been sampled
? 227 water samples were collected and 5,192 separate chemical tests undertaken
? No benzene or toluene above detectable or trigger limits was found
Monitoring bores installed by Cougar Energy
? 10 bores located 20 to 276 metres from the pilot burn have been sampled
? 135 water samples were collected and 7,748 separate chemical tests undertaken
? As previously advised, two isolated and transient measurements of benzene (2ppb) above drinking water levels were detected in one well sampled in May
Here is an important statement taken from a CXY announcement to the market on the 12 August 2010:
CORRECTING INCORRECT AND MISLEADING PUBLIC STATEMENTS
The Directors advise shareholders and the market generally of their concerns regarding numerous uninformed and misleading statements made or published in the public arena in relation to alleged threats of toxic contamination to water supplies resulting from the Company?s operations at Kingaroy. Cougar Energy categorically rejects any statement, implication, conjecture or speculation that it has compromised the drinking water quality in the Kingaroy region. The Company and its Directors are alarmed at the misleading information being distributed by several parties in an apparent attempt to satisfy their own agendas, including the introduction and use of the expressions "poisonous" and "cancer-causing" in their efforts to seek attention and question the integrity of the Kingaroy project. The FACTS are that the Company?s test results, supported by the parallel tests undertaken by DERM, confirm the following: Cougar Energy?s Kingaroy project has presented
? no danger to human health
? no danger to drinking water
? no danger to livestock, and
? no danger to other farming activities.
Cougar Energy?s Kingaroy project has not spread
? any poisons, nor
? any cancer-causing agents
into community groundwater supplies. None of the water bores outside the Company?s pilot plant and used by local landowners for extracting saline water (unfit for human consumption) have ever measured any detectable levels of hydrocarbons. Further, it is important to note that two readings analysed by the independent testing laboratory proved to be false and provided incorrect results. These were readings of 84ppb (parts per billion) of benzene attributed to one of the Company?s monitoring bores in the pilot plant area (200 metres from the gasification process) and 3ppb of toluene (trigger standard 800 ppb) attributed to a distant saline water production bore. The independent testing laboratory engaged by Cougar Energy has confirmed these mistakes in writing to the Company and copies of these reports have been passed on to DERM, for which DERM has acknowledged and accepted. Despite DERM?s acceptance that these results were false and incorrect, there continue to be reports (see South Burnett Times "Residents confront environment minister" 10 August
2010) of these tests being relied on as evidence that Cougar Energy?s Kingaroy project should be shut down permanently. The Company expects that any representations on this issue deal only with the facts and that the proper processes of evaluation will be allowed to continue. The Company is taking legal advice on remedies available to it for any such misrepresentations of fact. There have been public reports of "exceedances" of chemicals attributed to the Kingaroy site. The only sample results which were above trigger reporting guidelines were two tests of 2 ppb of benzene received in June 2010 (see the Company?s letter to the ASX of 29 July 2010). They emerged for a short period of time before falling below trigger detection levels. The Australian Drink Water Guideline standard is 1 ppb, the United States standard is 5 ppb and the World Health Organisation standard is 10 ppb. These results were attributed to one monitoring well 200 metres from the gasification wells. A neighbouring monitoring well 10 metres from this monitoring well showed no detection above reporting levels. The monitoring well in question was installed solely for monitoring, is not designed to draw water for any purpose and contains water unfit for human consumption. In fact DERM states that persons will have significantly more exposure to the hydrocarbon chemicals under investigation from the air they breathe, and most particularly at suburban petrol stations (DERM Media Release 17 July 2010). Cougar Energy reaffirms its commitment to best practices in environmental management. The Company is preparing its environmental evaluation report to be submitted to DERM on 16 August 2010 for evaluation by the UCG Scientific Expert Panel prior to a decision by DERM as to the future of the Company?s Kingaroy Pilot Burn. For further background information refer to Cougar Energy?s ASX/Media Releases of 16, 19, 20 and 23 July 2010 and Response to an ASX Query Letter of 29 July 2010 which all appear under the Company?s symbol CXY on the ASX website (www.asx.com.au) and on the Company?s website www.cougarenergy.com.au. Investor contacts: Dr Len Walker Brad Glynne John Field Managing Director GM ? Corporate Finance Field Public Relations Tel: + 61 419 587 396
Now this is where matters start to become very political against Cougar.
With the farmers building momentum against Cougar's plant, based on misinformation and a mistaken ground water sample, KCCG (Kingaroy Concerned Citizens Group) lobbies The Independent MP, Dorothy Pratt, who by the way receives Labor preferences at election time.With Dorothy Pratt once being very supportive of CXY, she now had to change her stance because of the pressure from the farmers. This electorate has tradittionally been a NLP stronghold since the Joh Bielke Peterson days, and today Labor might not have the seat but they have the Independent MP's vote. With the fear campaign building while CXY ARE SHUTDOWN with incorrect claims of FARM WATER CONTAMINATION by the farmers, it could be perceived as political suicide to go against the farmer's desires, however misinformed they are.
So on the 28 January 2011, CXY were told that the plant would be shut down, decommisioned and the site rehabilitated back to its natural state. This shut down was all based on the ISP's report that found the following: 1. the threat of contamination to the ground water to be to great of a risk. This has been proven to be an incorrect finding as explained above. 2. CXY does not rely on alot of in-house technical capability, and can rely on the Ergo Exergy consultants (whom own the technology). The ISP does not like this approach. This in my opinion is a very closed minded view and irrelevant. Wouldn't you prefer to use a company that has experience and has many projects all around the world. Ergo Exergy has proven world class technology that is being embraced by many advanced countries such as Canada, New Zealand, and South Africa. Dr. Len Walker the managing director has a years of experience with ground water and UCG. Here are his credentials: Dr Walker is a civil engineer with tertiary qualifications in both geotechnical engineering and business administration. For 12 years he was Managing Director of a leading Australian geotechnical engineering consulting firm, during which time (in 1982) he first became involved in UCG project evaluation.
Since 1984, he has been involved in guiding the development of small publicly listed resource companies, both as an investor and as Managing Director. These companies were active in gold mining and oil and gas exploration. He has worked for more than 20 years on the introduction of the UCG process in Australia, culminating in 1999 in the initiation of the pilot burn at Chinchilla, Queensland, the longest test burn yet conducted in the Western world. He has also been active in seeking international UCG projects, and has published technical papers in this field in Australia, the UK and USA.
Dr Walker was appointed Managing Director of Cougar Energy in November 2006 following the merge of Pinnacle VRB Limited and Cougar Energy Proprietary Limited.
3. "The documentation for the Environmental Evaluations and monitoring information provided by CXY has genrally lacked detail and been less-than-clear in explanation... and other comments that were difficult to interpret." ( ISP Summary Report p.5)
Maybe if the ISP had representatives who were experts in UCG that would be able to understand CXY's documentation. I will expand on this point further.
4. Infrastructure failures - one of the well casings did fracture, and this well was abandoned and another was installed.
So there are a number of glaring issues: 1. the inaccuracies of the ISP final report for DERM. 2. the selection of the Independent Scietific Panel
1. So during the shutdown, CXY prepare a 600 page report for the ISP. Hundreds of ground water samples from monitoring bores around the plant and neighbouring farms are collected and independently tested for DERM. Only 2 bores show a reading of 2ppb (parts per bilion) of benzene which is over the Govt guidelines of 1ppb of benzene. However the DERM guidelines are very strict because the WHO regulations for safe drinking water is 10ppb of benzene. Now the bore water being tested in and around the plant is not even drinking water for humans and not even fit for stock because of the high saline content.
2. Here are the members of the Independent Scientific Panel: Professor C.J. Moran Director, Sustainable Minerals Institute, The University of Queensland.
Emeritus Professor C. Cuff, Principal, C&R Consulting.
Professor J. da Costa, School of Chemical Engineering, The University of Queensland.
I don't see anybody with experience in UCG.
Here is a list of experts on UCG from the UQ school of mining/mech eng. website, coal gasification page ? and whose opinions were not sought by DERM:
Dr Alexander Klimenko
Dr Bo Feng
Prof Hal Gurgenci
Prof Suresh Bhatia
Prof Michael Blinderman
Dr Matthew Cleary
Mr Dmitry Saulov
Mr Paul Bedi
Mr Chetan Chodankar
With all these experts in UCG one would think it logical for DERM to select at least just one of these experts with the specific techical capability to understand CXY's reports. This to me is a huge discrepancy in the credibility of the ISP's report that DERM used to base it's decision on shutting down CXY's Kingaroy project. I and many other supporters feel the ISP's report is flawed.
So in conclusion i will leave you with 12 Reasons why Cougar Energy?s Kingaroy project should be allowed to continue:
1. The underground water (aquifer) in which Cougar Energy is operating, cannot be used for human consumption (due to high salinity and high heavy metals). At best, it can only be used for stock watering purposes. Hence, the statement that Cougar Energy received samples containing 2ppb of Benzene, which is above the Australian Drinking Water Guidelines of 1ppb Benzene, is completely irrelevant.
References
? 27 Sep 2010.pdf (pp2)
2. A number of Coal Bed Methane (CBM) companies including Arrow Energy and Origin Energy have reported at least 2ppb of benzene in their operations with no action from the QLD government. The maximum amount experienced by Cougar Energy was 2ppb, which was transient in nature and in no way indicated an ongoing trend of detection. There is a blatant display of favoratism towards CBM by the QLD government.
3. Such minute levels (2ppb) of Benzene can be naturally occurring within coal seams and the underground environment. Additionally, these levels could also be obtained through contact with petrol, diesel, lubricants or cigarettes. It is worth noting that the reasonable limit of detection is 1ppb which makes it absurd that the drinking water guideline is also 1ppb. Please note below, the following limits placed on Benzene in the Drinking water guidelines of other jurisdictions :
World Health Organisation Guidelines ? 10ppb (0.01mg/l)
New Zealand Drinking Water Guidelines - 10ppb (0.01mg/l)
South African Drinking Water Guidelines - 10ppb (0.01mg/l)
US Drinking Water Guidelines ? 5ppb (0.005mg/l)
Canadian Drinking Water Guidelines - 5ppb (0.005mg/l)
UK Drinking Water Guidelines ? 1ppb (0.001mg/l)
Australian Drinking Water Guidelines ? 1ppb (0.001mg/l)
4. The successful Chinchilla trial, conducted from 1999 to 2003 was undertaken by Dr Len Walker, utilising the same technology provider, Ergo Exergy of Canada, that Cougar Energy is using at Kingaroy. The Chinchilla trial reported no adverse environmental impact and was operated with extensive environmental oversight by the QLD government?s Environmental Protection Agency (EPA) (now superseded by DERM). The same Ergo Exergy personnel as designed and operated the Chinchilla trial, are providing the technology for the Kingaroy trial.
5. Cougar Energy?s Technology provider, Ergo Exergy Technologies Inc. of Canada is the undisputed world leader in underground coal gasification (UCG). It was Ergo Exergy?s design and operation of the Chinchilla trial from 1999 to 2003 that put UCG on the map in the western world. Some of Ergo Exergy?s key personnel individually bring over 50 years of practical, real-world commercial UCG experience to Cougar Energy?s disposal. Ergo Exergy has designed and currently operates a long list of the most successful and advanced UCG projects around the world, including in Canada, South Africa, New Zealand, US and Australia. Many other projects are in development around the world based on Ergo Exergy?s PROVEN, COMMERCIAL technology.
References
www.ergoexergy.com
6. It is generally accepted that fully renewable energies such as solar and wind are not commercially ready to provide the full commercial demand for energy, which is growing exponentially around the world. Most governments (and climate change proponents) agree that cleaner use of traditional fossil fuels is required to provide for the growing energy demand whilst also decreasing CO2 emissions. Ross Garnauts recent papers and speeches back this up in specific terms of the Australian situation. UCG represents the most economical and efficient ?clean coal? technology and as such, is being accepted and promoted in just about every political jurisdiction in the world.
7. Kingaroy, has for the past 30yrs been established as a mining town due to the immediate physical proximity of the Tarong Power Station and supporting Meandu open cast coal mine. Such energy industry is not new to the area, and without it, the regional development of the area would be severely compromised. The strategic energy hub that this area creates is of far more importance than the limited ?hobbie? farming which is conducted in the area.
8. QLD is currently not building enough new power stations to meet the continually growing demand and is fast approaching a situation where demand will outstrip supply and electricity prices for all Queenslanders will go through the roof and/or mandatory rolling blackouts will be implemented. This situation is exacerbated by the fact that the coal fired Tarong power station, which provides approximately 30% of QLD?s power, has passed its design life of 30 years. Although its owners, the QLD government, have found enough expensive coal to keep it running for the next 5 years or so, impending Federal carbon legislation may prevent a new coal mine from being developed to supply the power station with fuel in the long term. Should this power station, which has one of the biggest CO2 footprints in Australia, be decommissioned, there is no plan for replacement of that significant supply of power. UCG could offer a cleaner fuel solution for the power station which would considerably reduce its CO2 footprint and allow it to continue operating into the foreseeable future, whilst utilising Australia?s most extensive resource, coal.
9. The Independent expert report that the Government commissioned in relation to Cougar Energy?s activities was not performed by the best experts for the job. The supposed experts were experts in hydrogeology, not UCG. Actual experts in UCG, for example from the University of QLD, were not even approached for their opinions, or to be on the panel. There is no way that ?experts? in the specific field of hydrogeology, could provide an expert opinion on UCG as it relates to hydrogeology. This was clearly evident in their limited 11 page report to the QLD government. It was also evident that these supposed experts had not referred to or understood the specifics of Cougar Energy?s 600-plus pages of report on the Kingaroy operation which was submitted to DERM.
10. The primary reason for stopping Cougar?s Kingaroy project, given by the QLD government, is that Cougar was unable to show that it could not operate without adverse risk to the Environment. The whole point of allowing 3 companies to perform pilot operations in QLD, as per the government?s moratorium policy on UCG 2009, was so that they could demonstrate the environmental credentials of the technology. It is literally impossible to ?show? that there is no risk to environment with reports only, no matter what the size. To ?show? such a ?conclusion? requires physical proof, hence the government?s 2009 policy which approved 3 pilot operations.
References
ucg_policy_february_2009.pdf
cougar-energy-report.pdf
11. Out of 33 trials conducted in the United states, primarily by the Department of Energy (DOE) and Laurence Livermore National Laboratories (LLNL), only 2 reported ground water contamination. The reasons for contamination and the mitigation measures to avoid such contamination are well understood. The most recent trial conducted in the United States, Rocky Mountain 1 (RM1), showed that UCG can be conducted without uncontrolled impacts to groundwater.
12. People should not be scared of gasification. Coal gasification has been around for hundreds of years and was first used to commercially supply reticulated ?town gas? in London. It was also used in a similar manner in most major cities in Australia, including Brisbane where the gasification reactor vessel can still be seen beside the BGGS rowing sheds on the side of the Brisbane River in West End. The gasification process is well understood and performing it underground is most expertly understood by Cougar?s technology provider, Ergo Exergy.
CXY Price at posting:
1.7¢ Sentiment: Hold Disclosure: Held
