.bhp's announcement and ramifications 4 lnc

From The Australian 29.1.2011


Good Morning ALL,

Needless to say I am still smarting from last weeks sell off.Undetered I have been snooping around for price support justification.LOL

I do expect to be accused of drawing a long bow here however this positive announcement at the weekend by BHP into coal seam gas extraction from coking coal in the Bowen basin can only be a plus for LINK ENERG's tenaments in the Bowen Basin.

1)This BHP announcement underpins LNC's assets in the same area ( Bowen Basin: LINC's Teresa tenament( capable of producing 5.5 Billion Tonne P.A * ASX Announcement NOV 22 2010 ) 125 SQ KLM Teresa Nth and South 68 SQ KLM Lucknow 104 Sq KLM

2)Establishes a real market valuation on LNC's coal assets and further endorses LNC's business model.

3)Marius Kloppers current agenda to push forward in carbon capture and his recent announcements highlighting carbon emissions and BHP's call for a carbon tax is now consistant.
BHP has effectively upped the ante and the race could now be on in earnest to sure up quality proven acreage to gain economies of scale.


Below is the article in the weekend Australian.http://www.theaustralian.com.au/business/bhp-aims-to-drill-for-gas-in-bowen-basin/story-e6frg8zx-1225996392895.

It reads as follows:

BHP Billiton is considering producing and selling coal-seam gas from its big Wards Well coking coal project in Queensland's Bowen Basin.
The miner has asked the federal Environment Department to start the approvals process on a 55-hole exploration drilling program to test whether a 7 million tonne a year hard coking coalmine at Wards Well, which is west of Mackay, is feasible.
As part of the investigation, 12 holes will be drilled to test for CSG.
As well as the underground mine, BHP said it would look at building a gas-fired power station and at the potential to make money from the gas contained in the coal seams.
"Mine development and related issues such as potential gas extraction and potential commercialisation would be dealt with as a later, completely separate referral process," BHP said in a document filed with the department.
Coalmines need to extract gas in order to mine safely, so it is possible BHP is only considering producing small amounts, rather than returning to coal-seam gas production aims it had talked up in the early 2000s.
Since the CSG boom in Queensland spawned at least three big liquefied natural gas proposals, two of which have been approved, BHP has not shown any interest in the sector.
BHP yesterday was unable to confirm the extent of its gas commercialisation ambitions.
The company produces a small amount of coal-seam gas from its Illawarra coalmines to run its own power station and provide gas to local power stations.
BHP plans to get the approvals process on the mine and gas extraction started in the middle of this year, well before the results of the drilling come through next year.
BHP, which is the world's biggest coking coal producer, plans to bring its Queensland coking coal production, including joint venture partners' share, from around 60 million tonnes a year to 80 million tonnes.
It has not given a timeframe for its goals.

Map of Bowen Basin

http://www.dme.qld.gov.au/zone_files/coal_files_pdf/cen_qld_coal_map_08.pdf