Leigh Creek Energy’s proposed urea production facility would...

Leigh Creek Energy’s proposed urea production facility would cost $2.6 billion to build and have a commercial life of more than three decades, the company says.

The Adelaide-based firm has released the prefeasibility study (PFS) for its project, which would produce urea for the fertiliser market using an in-situ gas production method.

The study envisages a plant producing one million tonnes of urea per year, with potential to increase to two million over the medium term.

The hydrogen production potential of the project would be determined once the engineering design was finalised, the company said.

“The company is in discussions with several potential offtake partners,’’ the announcement to the ASX says.

“Leigh Creek Energy aims to have commercial partnerships and offtake covering 100 per cent of production capacity.’’

LCK managing director Phil Staveley said the project was expected to be carbon neutral by 2030, and provide a low-cost urea solution for the Australian agricultural sector.

“Completion of the PFS moves LCK a step closer to initiating construction of this major project that will stimulate the South Australian regional and state economy and underpin Australia’s agricultural sector by producing nitrogen-based fertiliser and hydrogen products for local and international markets,’’ Mr Staveley said.

“LCK’s facility will be the only fully integrated urea production plant in Australia, with an on-site 100MW power plant and nameplate one million tonne per annum capacity, with potential to increase to two million tonnes per annum in the future.

“Building significant infrastructure in a remote part of Australia will not be without its challenges, but the (project) will be a fully-integrated urea production project with gas feedstock generated on-site and the PFS has reduced and eliminated a number of potential project risks.’’

The project will use in-situ gasification, which involves drilling inlet and outlet wells into coalfields.

The coal is then heated and an oxidant - air or oxygen - is injected to “gasify” the coal.

Based on the current design, LCK expects to construct 41 gasifiers, with the coal targets sitting at 200m-1100m underground.

“Syngas will be collected via a network of pipes and dispatched to an above-ground gas processing facility, before it is sent to the on-site power station and downstream processing facilities,’’ LCK says.

The company said it will start a bankable feasibility study early next year “and, in parallel, progress the upstream field development plan’’.

“The company anticipates having all the data required for an Environmental Impact Statement submission for operation in the second half of 2021.

“Upon the completion of the (coal) seam identification process, the company intends to drill up to five additional gasification wells that will supply a 5MW power station.’’

LCK shares were steady on 11.5c.