THE Queensland Government last night backed away from a statement claiming that it would not issue any new licences for underground coal gasification technology for three years -- but not before the share prices of the two main companies operating in the area dropped dramatically.
A statement to The Australian on Wednesday from Queensland Mines and Energy Minister Geoff Wilson said the department "has no intention of granting production tenures for underground coal gasification for at least three years".
After this statement appeared in yesterday's edition of The Australian, the share price of Linc Energy, the main company in the field, dropped immediately from an opening of $3.38 to $2.82.
But when Linc Energy issued a statement to the market at 10.20am in which it denied that the Queensland Government had made such an announcement, its price rallied slightly to close at $2.93.
This respresented a drop of just under 13 per cent during the day, or a loss of about $150 million of value in the company.
Perth-based Carbon Energy, which also has interests in underground coal gasification, had an even more dramatic drop, closing at 37c, a drop of 35 per cent during the day.
Mr Wilson issued a statement late yesterday in which there was no mention of a three-year moratorium, and he would only say that the Queensland Government "would only do what was best for Queensland in relation to underground coal gasification technology on trial in the state".
He said the Queensland Government would not grant production tenures for any technology that was untried and untested in Australian conditions.
"These projects are in a pilot phase which is why they have a conditional tenure and that gives no automatic right to a production tenure at a later point," he said.
"We're not about to give the green light to underground coal gasification projects, especially where any of them may affect the Great Artesian Basin, unless we're convinced it's in the best interests of Queensland."
The Queensland Government made its statement as a court battle continued between Linc Energy and coal seam methane gas producers Queensland Gas concerning access to coal-rich fields in the Surat Basin west of Brisbane.
Linc Energy has tenements over land near Chinchilla, where it has a pilot plant burning coal underground using technology that originally came out of the Soviet Union.
But while it has these tenements under the Minerals and Resources Act, Queensland Gas has tenements over the same land under the Petroleum and Natural Gas act.
This case, in the Queensland Supreme Court, has been continuing this week.
While multiple tenements have existed before, the main issue in this instance is that production of coal seam methane and underground coal gasification technology are broadly incompatible, because the latter involves burning the former.
