PtolemyI said I'd get back to you ... first to quote the essence...

Ptolemy

I said I'd get back to you ... first to quote the essence of two of your recent posts ...

"I don't believe 40MW is economically viable (at Kingaroy) ... Capex could be as high as $200 million for the power station and the UCG plant ... They may be able to get a bank to loan for half the amount, but what about the other $100 milliion ... CXY would have to issue another 1 billion shares at 7 cents a share to raise the $70 million."

"Compared to conventional coal mining, the overall opex (of ucg) is much lower. Compared to conventional gas, the opex and capex is much higher. It is not as simple as drilling some holes and all of sudden the money is flowing in."
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I notice on the new web site that the company claims something along the lines of ucg supporting economical smaller electricity generating projects than other energy sources. Wouldn't this be because capex and opex were less demanding?

Having said that, I am pretty sure it is a company intention to prove up a much larger resource to support larger generating capacity. The announced 40MW project requires only 0.5km2 at Kingaroy. An area of just 2.5km x 2.5km at the same site could theoretically support 389MW (but say 300MW) for 30 years. Would that stack up better for you?

The energy resource to support the larger project is equiv to about 830PJ per my prev calcs. Thats a significantly bigger resource than most "hot" coal bed methane plays currently on the ASX that are valued a lot higher and similar to QGC's much touted 1000PJ target for 2P reserves which is the main basis for their $2 bill mkt cap. Do you think it is reasonable to fix the CXY sp at 7c for any future capital raising?

I am not so sure about your understanding of relatively higher capex of ucg compared to conventional gas. Again, I can relate better to coal bed methane (CBM) than conventional gas. A CBM well field has a much lower capex but often a higher opex than conventional gas, simply because the wells are usually shallower and have a shorter life, necessitating a ongoing program of well replacement.

Based on some articles I have read on the benefits of coincident ucg/CBM projects, it appears that there may be real synergies when the CBM project involves a well field with in seam horizontal wells (it seems an efficient ucg project requires horizontal in seam drilling to assist in dispersing oxidants and extracting product syngas). From that, wouldn't you think that capex for a stand alone ucg project may be in the same ball park as a CBM well field, and possibly much less given that a ucg project need only be something like 1/16 the area of a CBM well field for equivalent energy output?

It is interesting that one doesnt really value a CBM project inclusive of a gas turbine generating plant ... probably because CBM can be pumped straight into a pipeline for distribution elsewhere for a range of uses. But as we know, Origin have just announced a 633 MW gas fired power stn fuelled by their own CBM ... and I am sure they will make a profit from their gas and a separate profit from their power station.

I think you will find that Cougar intend to get their cash flow only from supplying the syngas to a partner power station project within their ucg operation ... I think it is very unlikely that they would be intending to construct and operate the power station itself. So, in this model couldn't it well be a case of drilling a "few holes and all of a sudden the money is flowing in"? Well, not quite but you get my drift lol.

Regards
Poyndexter