Carbon Energy Limited : Low Cost Source of Natural Gas
06/25/2012| 08:12pm US/Eastern
26 June 2012
Level 12, 301 Coronation Drive, Milton QLD 4064 Australia
PO Box 2118, Toowong DC QLD 4066 Australia
phone + 61 (0) 7 3337 9944 fax + 61 (0) 7
Carbon Energy Limited
ABN 56 057 552 137
Carbon Energy (Operations) Pty Ltd
ABN 61 105 176 967
Carbon Energy UCG Syngas - Low Cost Source of Natural
Carbon Energy's (ASX:CNX; OTCQX:CNXAY) strategy to produce
cost-effective Synthetic Natural Gas (SNG) from UCG syngas
has received a major boost following completion of a study
conducted by Brisbane based process engineering specialists
SNG is produced through gas processing of syngas in
established commercial scale process plants and is
predominantly methane. It meets natural gas pipeline
specifications and is equivalent to conventional natural gas
or coal seam gas.
The 2012 Gas Market Review (consultation draft) released by
the Queensland Government last week identified a potential
shortage in supply of natural gas to the domestic market.
The LogiCamms report produced capital and operating cost
estimates at a Front End Loading (FEL) 1 level (+/- 50%) for
the manufacture of pipeline quality natural gas from UCG
syngas at a proposed plant at Carbon Energy's Bloodwood Creek
site, 45km west of the Queensland township of Dalby.
Capital cost and operating cost estimates for an 8 PJ per
annum and a 25 PJ per annum case were analysed for an
integrated UCG field and downstream SNG production plant to
assess the economic viability of a potential project.
The cost of producing pipeline quality natural gas from
Carbon Energy's UCG Syngas was estimated to be in the range
of $3.50/GJ to $4.50/GJ (excluding carbon tax and other
This compares to recently forecast contract natural gas
prices of $6.50/GJ to over
$10.00/GJ by 2015 (Source: QLD Government 2012 Gas Market
Review, Consultation Draft).
A key focus of the study was to determine how key utilities
for the UCG plant and SNG plant could be integrated and
shared. This include power generation, oxygen production,
production, cooling water, acid gas treatment and raw syngas
treatment in addition to developing an integrated site-wide
mass and energy balance.
The report follows an earlier concept study into the
production of alternative downstream products from UCG syngas
which confirmed the opportunity for the production of ammonia
and SNG. The earlier study, released in December 2010, was
conducted by internationally recognised consultants, Ammonia
Managing Director for Carbon Energy, Andrew Dash, said the
Company was extremely excited by the outcomes of the latest
"Over the past few years there has been significant expansion
within the gasification
industry globally which is contributing to more streamlined
manufacturing options and more commercially attractive
opportunities for the use of syngas. This includes
applications to produce electricity, chemicals, liquid fuels
and natural gas,'' Mr Dash said.
"We now have an independent assessment of the capital and
operating costs for manufacturing pipeline quality natural
gas utilising our proven UCG technology,'' he said.
The Queensland Government released last week the 2012 draft
annual Queensland Gas Market Review. The review identified
that while LNG proponents had been successful as customer of
other producers, "No customers seeking domestic supply of gas
reported achieving a term sheet (binding or non-binding) for
a large volume of gas".
Mr Dash said "Industry analysts and the Queensland Government
are forecasting that natural gas prices will increase
substantially and supply is being preferentially allocated to
the developing CSG to LNG projects. Consequently, there is a
potential shortage of gas for the domestic market."
"We have a certified 2P syngas reserve of 743 PJ at Bloodwood
Creek. This study indicates the potential for UCG syngas to
be a cost effective source of pipeline quality gas and for
Carbon Energy to become a significant natural gas supplier to
the domestic market in Queensland."
For and on behalf of the Board
For more information please contact Andrew Crook on +61 419
788 431 or refer to our website at www.carbonenergy.com.au
About Carbon Energy
Carbon Energy is a world leader of advanced coal technology.
Our business is transforming stranded coal resources into
high-value fuels with lower carbon emissions to meet the
increasing global demand for new, low cost, alternative
Carbon Energy is headquartered in Brisbane, Australia and
listed on the Australian Securities Exchange (ASX). The
Company also has an office in New York and is quoted on the
The Company's proprietary technology, keyseam® is an
innovation in underground coal gasification (UCG),
incorporating a unique site selection methodology and
advanced geological and hydrological modelling. Keyseam
maximises resource efficiency, extracting up to 20 times more
energy from the same resource than coal seam gas, whilst
minimising surface disturbance and preserving groundwater
Carbon Energy's technological advantage comes from its
association with Australia's premier research agency, CSIRO,
which includes world-class geotechnical, hydrological and
gasification modelling capabilities.
Carbon Energy is building an international portfolio of coal
assets suitable for keyseam® and accessible to high-value
markets. The Company has resources and rights to coal assets
in projects across Australia, Chile and the United