UCG and GTL is why most of us hold LNC BUT there is nothing wrong with the idea of expoiting conventional O&G traps should they be found.
Alaska is one place where syngas would likely get a nod as power station fuel in the first instance. Purchasing UCG coal assets in the US is (on a bigger scale) similar to SSN's Niobrara purchase a few years ago for nothing more than a peppercorn an acre.
Timing, risk, timing and risk.
The risk for UCG in the near term is the current abundance of tight O&G that can be fracked out in a cost efficient manner. Strategic investment has a longer timeframe however and it is expected (by the likes of CHK) that UCG will start to make its mark in the US from maybe 2015 onwards. Being extablished in the industry prior to then is a good move IMO.
As gas is substituted more and more for oil, UCG in the Southern 48 is likely to become a reality as it is cheaper and more accessable that deep sour crude.
LNC's SA prospects are great however they are unproven ATM and political risk is sadly a tangible reality in Australia.
Most successful oilers diversify risk and on that front I endorse PB's current diversification strategy.
cheers
LNC Price at posting:
$2.67 Sentiment: LT Buy Disclosure: Held
