AS ANNOUNCED BY SAPEX IN MARCH QUARTERLY ACTIVITY REPORT:Linc...

AS ANNOUNCED BY SAPEX IN MARCH QUARTERLY ACTIVITY REPORT:

Linc Energy has finalised a program for drilling holes in the areas encompassed in EL 3325 and 3326 as a first stage in testing the potential for Underground Coal Gasification (UCG). This program is expected to commence late in May 2008. Previous assessment in accordance with JORC principles has estimated 5.69 Billion tonnes of coal as inferred resources and exploration target in the combined two ELs.

THE QUALIFICATION IN THAT REPORT:

Linc Energy developed a drilling program to ascertain the SUITABILITY of the coal for UCG and also to define reserves of coal in accordance with JORC principles.

IMPLICATIONS IF THE COAL IS FOUND TO BE SUITABLE:
(The following is copied from Linc roadshow report of 2 days ago):-

UCG- is “very cost effective to roll-out and produce”,
with a Ucg field being able to be constructed in 6 to 9
months and $0.60 to $0.80c gigajoule.
• UCG-can “access huge stranded and sub-economic
coal” reserves, subsequently un-locking significant
reserves of energy currently un-available to the world
• UCG- can transform a low value asset of stranded coal,
into “a highly valuable resource of synthetic liquid
fuels” – every tonne of coal equals approximately 1.5
barrels of oil.


The operative words here are
1. UCG field being able to be constructed in 6 to 9 months. So if the Sapex cOAl is suitable, then the UCG field should be up and running in about a year or so.

2. UCG can assess huge stranded and sub-economic coal reserves. This is a very apt description of the brown coal deposits that Sapex holds in its ground. It is uneconomic coal at the moment. However if LNC's UCG succeeded, then there is the potential of every tonne of the coal being equivalent to 1.5 barrels of oil. That is a very big figure, so lets all hold our horses and not start throwing billion dollar figures into the air till it is actually proven to work.

Below is Linc Energy plan for the year. I note that point 4 states that UCG expansion is underway.

1. Complete CTL 5-10 barrel/day demo plant…(commissioning
underway)
2. Erect 5Mw Gas Turbine, producing IGCC power, operating on
UCG gas at Chinchilla… Plan completion by December 2008.
3. Complete EIS and Engineering design for 20,000 barrel/day
commercial UCG to CTL facility – (EIS to be completed by mid
2008…. The 20,000 barrel/day engineering plan to be completed by Nov, 2008.
4.Commence expanding UCG field. (UCG expansion is Underway).

I could only find the following three JVs when I started to look for Linc Energys ventures with other companies, viz:

– MOU and proposed JV with SAPEX
– MOU and proposed JV with VINACOMIN
– Marubeni and MOU with Shiv-Vani

So the only company that Linc Energy could be referring to in Australia when it talks of UCG expansion is Sapex. If this is correct, and if this is what Linc is referring to when it says that UCG expansion is underway, then I read it that Linc is convinced to a certain degree that Sapex's coal is suitable for CG, and that UCG of Sapex coal will proceed soon

I note that Eastern Star Gas is starting its drilling program for CBM in this quarter. it is a drilling program that has no cost to sapex monetarily, but they relinquish 25% ownership of the PELs to ESG. In my books, 75% of something is definitely better than 100% of nothing. That is something that has an excellent chance of success, considering the volume of underground coal present.

We also have to remember that the ESG board has shown great faith in Sapex, as they have invested their own money in this company and make a large proportion of the top 20 shareholders.

I cannot stress the importance of the Boorthanna trough Seismic survey. Could be nothing, could be everything, but the geology of the area appears to be very interesting.

My only faulting of the Sapex board is that they are not giving us any up to date information. It is always the same tired news in different packages, and I really do not know why the company is so reticent in informing share holders of progress.

well, ho hum