Proactiveinvestor +POV

Email to a friend:
To:
Separate multiple addresses with commas.
From Email address:

Name: Please send me a copy Message:
Verification code http://www.*.com.au/img/reload.gif
Enter the code from aboveRequired

Send


Carbon Energy positions Blue Gum Gas Project for commercialisation

Wednesday, October 22, 2014 by Proactive Investors

http://www.*.com.au/genera//img/companies/news/flare_bwc_x_358_5446fa644de28.jpg
Carbon Energy positions Blue Gum Gas Project for commercialisation
Carbon Energy (ASX:CNX) continues to position its Blue Gum Gas Project in Queensland for commercialisation with key findings from its Bloodwood Creek Pilot Project providing support.

Shares in the company should trade higher today on the news, which could unlock Queensland’s fifth largest Proved and Probable (2P) Reserve of 1,128 petajoules (PJ).

Bloodwood Creek had proven that coal gasification ceases within 48 hours of stopping air injection while water in the cavity was found to be of stock water quality.

Just last week, an independent expert valued the company’s Surat Basin gas assets at between $91 million and $600 million, with a preferred valuation of $205 million.

This is more than three times its current market capitalisation.

The company has submitted a Rehabilitation Plan for its Bloodwood Creek project in Queensland, the final step in demonstrating its ability to operate an underground coal gasification pilot plant to the highest environmental standards.

A positive decision would allow the company to commence the processes required to develop the Blue Gum Project, which is expected to initially deliver 25PJ per annum of pipeline quality gas from around 2017.

Bloodwood Creek Pilot Project

In 2012, the Queensland Government appointed an Independent Scientific Panel (ISP) to assess the pilot trials in Queensland.

The ISP recommended that decommissioning be demonstrated prior to commencement of commercial operations.

Carbon Energy has now fully responded to this ISP requirement for its Bloodwood Creek Pilot Project.

Key findings from the project include:

- Safe and effective operation: Through the project, the company demonstrated the safe and effective operation of the CSIRO-developed technology. In mid-2012, it was reported that Carbon Energy had achieved independent verification of the production of Syngas with world leading quality and consistency;
- Gasification ceased within 48 hours: All gasification was shown to have ceased within 48 hours of stopping air injection, as demonstrated through the change in gas composition, confirming the successful decommissioning of the UCG gasifiers in line with expectations;
- No impact on regional use of groundwater: Site investigations has proven that the keyseam technology could be operated without impact on the regional use of groundwater; and
= Cavity water of stock water quality: The self cleaning principle of the Company’s keyseam design was proven, and steam cleaning during decommissioning has resulted in the water remaining in the cavity being of stock water quality.

Blue Gum Project

The Blue Gum Gas Project in the Surat Basin is located within easy access to markets and close to existing infrastructure.

The project, to be developed on the current Bloodwood Creek site and adjacent land owned by the Company, will assist in addressing forecast medium term local gas shortages from around 2017 by delivering 25PJ per annum of pipeline quality natural gas for use by local industry.

Carbon Energy is continuing discussions with potential investors and off-take partners for this project.

Gas supplies on Australia’s East Coast are constrained due in part to the export liquefied natural gas projects that are currently under development at Gladstone.

As a result, recent east coast gas contracts have averaged more than $8 per gigajoule compared to expiring contracts that average between $3 to $4 per gigajoule.

keyseam® technology

The keyseam® technology is key to unlocking deep uneconomic resources, offering a novel design and approach to UCG including:

- Consistency of gas quality;
- Commercial scalability;
- Continuous versus “batch” process;
- Geotechnical stability of wells;
- 6 years of field trials by Carbon Energy > $100 million in R&D;
- Proof of concept of keyseam reached through >20 months of continuous production of consistent high quality Syngas; and
- Over 2,000 samples collected over 6 years reported to government agency monthly to prove environmental standards.

Analysis

Carbon Energy continues to progress its Blue Gum Gas Project towards first gas in 2017 subject to finding suitable investment partners and receiving State Government approvals.

The results from the Bloodwood Creek Pilot Project demonstrate the company’s ability to decommission an underground coal gasification operation, a key step required before commencement of commercial operations.

Shares in the company have more than doubled from $0.023 on 19 September prior to the Reserves update being made the following Monday, to the current price of $0.053.

There is potential for further growth with share price kickers include:

- QLD Government approval of the rehabilitation plan for the Bloodwood Creek project, allowing CNX to start approvals process for Blue Gum;
- Secure off-take and Investment in the Project;
- Secure Queensland Government approvals;
- Commence Blue Gum Gas Pre-Feasibility Study and initial works;
- Expand Resource holding through Joint Venture with QLD coal owners;
- Generate revenue through licensing of technology; and
- Commence construction of Inner Mongolia project.