Coal 2.0 - CBM/CSG, UCG, CTL etc.

Altona going ballistic from 7p to 19p in a week and no-one seems to know why.

Perhaps this note from Evolution is something to do with it? They value the share at 34p.

http://go2.wordpress.com/?id=725X1342&site=altonaenergy.wordpress.com&url=http%3A%2F%2Faltonaenergy.files.wordpress.com%2F2010%2F03%2Fevo20altona20energy20initiation201920032010.pdf&sref=

In reply to Mattybuoy, post #54

Does anyone know a quick and dirty conversion factor from PetaJoules to TCF or BCF?

1PJ = 1.05bcf, according to this: http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/sttstc/nrgycnvrsntbl/nrgycnvrsntbl-eng.html

Cheers,

Mark

Thanks, though I had found out for myself too :-)

As an aside, I am a bit dis-chuffed that the formatting of the company list in the header is now all to cock. I will have to sort it out.

[ EDIT - Done, by virtue of removing the Ps, which is a shame but there you go ... ]

Several RNS's from Altona today, which seem to suggest that the recent price share price rise is down to the recent $40bn BG/CNOOC CSG/LNG deal which was approved by the FIRB.

The company has also completed an over-subscribed placing for £3m at 9p.

http://www.investegate.co.uk/Article.aspx?id=201003300700383866J

Meanwhile, Linc has arranged an A$81m stand-by convertible loan facility with a US scalping outfit.

Peter Bond, CEO of Linc Energy, said today, "The SpringTree Agreement increases our available funds and will replace the Yorkville convertible note facility which has remained undrawn for about 3 years. The SpringTree facility is on good terms and very user friendly.
Whilst it is not Linc Energy's only available funding option, this facility is certainly a very
good alternative which provides the Company with the flexibility to continue to execute its
business plan for the foreseeable future and prior to the conclusion of a coal asset sale. The facility has the added benefit of being able to be cancelled by the Company at any time if it is no longer required."

http://www.stocknessmonster.com/news-item?S=LNC&E=ASX&N=219510

Been a while ...

I found an interesting company over in Canada  - Peat Resources (TSX:PET).

http://www.peatresources.com

Peat is a form of "decomposing biomass" or "quasi-coal" which is the first stage in the long-term decomposition and compression cycle which ends up with the high-energy products of bituminous, metallurgical and anthracite coals.

Living biomass -> Peat -> Lignite -> Sub-bituminous -> Bituminous etc.

Several countries burn peat for power generation including Ireland and Finland. However, they do it in an "unsustainable" way which involves draining in their entirety the bogs wherein the peat lies and then digging it up. This leaves a useless (at least in the short term) hole in the ground. If you've ever been there this is how the Norfolk Broads were formed.

Peat Resources however believes that it has come up with a way to mine the peat in a sustainable manner. This involves a) only removing as much peat over a timeframe as the area can replenish and b) not draining the bog but using techniques to remove the peat while leaving the water in place. This latter apparently forms an instant carbon sink, so not only is the process carbon neutral it actually removes carbon from the atmosphere.

Well that's what the company says at least, and in order to put meat on the bones of the theory they are currently engaged in testing things out in Newfoundland in eastern Canada.

Besides this trial initiative the company has staked out a lot of peat-containing ground in Ontario, where the hope/plan is to supply it to existing coal-fired power stations either as a replacement for coal or as a supplement. Adapting coal-burning equipment to peat is supposedly not too difficult or expensive.

As with a lot of things, Canada has the largest resources of peat in the world. So I guess the long-term thing here is to roll out the sustainable extraction process to as many places as possible, perhaps pursuing international opportunities along side. Using technology to farm in to stranded or useless resources at a cheap price, this is exactly the kind of play I like.

If the thing works, it may be a way to have your cake and eat it too. Burning "coal" while simultaneously removing carbon from the atmosphere. How about that? !

The company has a miniscule market cap, but will need substantial funding if it is to ever move to commercial production.

Have a look at the website if you are interested.

Wildhorse Energy (ASX:WHE) has released a Scoping Study on its UCG project in Hungary.

http://www.stocknessmonster.com/news-item?S=WHE&E=ASX&N=491646

It's worth noting that until quite recently this company was entirely focused on uranium. However, when you see figures quoted like 20-25 Euros/GJ for Eastern European natural gas prices in the 2035 timeframe the attraction of Hungarian gas in any form becomes quite clear.

Altona Energy Plc ('Altona' or 'the Company')
CNOOC-NEIA - Successful FIRB Assessment

Altona Energy Plc, the AIM listed Australia-based energy company, is pleased to
announce that CNOOC New Energy International (Australia) Pty Ltd ('CNOOC-NEIA'),
has received notification from the Foreign Investment Review Board ('FIRB') that
there is no objection under Australia's Foreign Investment Policy for its
participation in and establishment of the Arckaringa Unincorporated Evaluation
Joint Venture ('the JV').

Formed specifically for the JV with Altona, CNOOC-NEIA is an Australian
subsidiary of CNOOC-NEI, one of China's major oil companies. Following the FIRB
assessment, the JV is able to proceed on the terms agreed, the first step of
which is for CNOOC-NEIA to provide the funding for the completion of a Bankable
Feasibility Study ('BFS') for the commercialisation of the Arckaringa Project.

Altona Chairman Chris Lambert said, "The success of CNOOC-NEIA's formal
application to FIRB represents a crucial milestone for the JV as it opens the
gate for the full mobilisation of JV resources and advancement of the BFS for
the Arckaringa Project. CNOOC-NEIA is now able to release the capital required
for the all-important BFS, which will determine the most profitable applications
for our 7.8 billion tonne coal resource.

Yes indeed :-)

It's worth noting that the Chinese are also involved in JVs with fellow conventional CTL player Blackham Resources as well as 3 out of 4 of the UCG companies CGV, CXY & LNC.

Contrast with the deafening silence on these issues from the Western oil majors ... One might speculate that things will get viewed in a new light after the true costs of deep offshore oil are re-calculated after the GoM disaster is finally over in around about 2035 or so. Maybe.

If you can stand 1.5 hours of unabashed Australian style ramping and "straight talk" then the webcast below from Linc Energy is well worth listening to, with much interesting info to be gleaned way beyond what has been disclosed to the ASX.

About one third of the time is taken up, unusually, by a fund manager who a) appears to have a brain and b) explains why his firm is very keen on LNC.

http://www.brr.com.au/event/66149/the-power-of-underground-coal-gasification

Matty - anything on there about the fuel cells 'Linc' up with AFC Energy?

Yes there's a bit. I can't remember how far in though.

Basically, Linc see the hydrogen/fuel cell thing as a big plus point for Europe, where CO2 is a big issue and has to be paid for. Which, considering they currently have no projects on the continent, shows how long-term they are thinking.

AFC were described as something like "a great bunch of guys ... engineers" and the product as "actually working, not just lab scale".

The whole thing is well worth a listen.

One thing I found quite surprising was how long it takes (or doesn't take) for the UCG->GTL process to convert the raw underground coal to diesel. It's 6 minutes from the point of ignition, which to my mind is quite stunning.

If you believe in the UCG and GTL story, which I realise most people probably don't, then Linc represents a very good way in. The impending met coal sales de-risk the current market cap entirely. So you could think of it as a zero cost option on around 100bn barrels of oil ...

Blackham Resources has released a study on the mining costs of its above-ground Scaddan CTL project.

http://www.stocknessmonster.com/news-item?S=BLK&E=ASX&N=494854

They reckon $8.22/bbl equivalent. However, this is only the "cheap and easy bit", there is a GTL plant that needs to be accounted for too ...

Meanwhile WildHorse Energy has bought another UCG license in Hungary.

http://www.stocknessmonster.com/news-item?T=9VLXziwLehQSLXmKOHncCA&E=ASX&S=WHE&N=494878

Added another couple of companies to the header ...

One is called C2E International, a private Hong Kong based enterprise which claims to have invented a "zero-emission" CTL process. Unfortunately there is no substantive information on the website to back this up, however I suspect this is just the usual Chinese opacity, rather than misrepresentation. They supposedly have a 1,900 bpd trial plant in operation already.

The other company is CanAm Coal (TSX:COE), who are licensing the C2E technology with a view to using it at their Alabama and Colorado coal projects. It should be interesting to watch how this goes, to see if the tech works and also what sort of obstacles get thrown up by politics etc.

'AFC Energy plc (LSE:AFC) ("AFC Energy"), a leading developer of low-cost alkaline fuel cells, is pleased to announce that an alkaline fuel cell system has been successfully deployed and operated at Linc Energy's (ASX:LNC) ("Linc Energy") underground coal gasification ("UCG") demonstration facility in Chinchilla, Australia........'

'......this combination provides potential access to billions of additional tonnes of coal in the UK without the environmental impacts of conventional underground or open cast mining. The alkaline fuel cell converts hydrogen to electricity at 60 per cent. efficiency and at an estimated cost per kilowatt hour as low as 4 pence....'

http://www.investegate.co.uk/Article.aspx?id=201006290700103852O

Looks good so far.... but a long way to go.

AA

Yes it is good, thoughs some detail on the deployment would be nice, like throughput etc. Linc never give out numbers for anything ...

One other point. Linc are always going on about how you need a nice thick and contiguous coal seam to do UCG properly. However, as I understand it, while there certainly is a lot stranded deep coal in the UK it is mostly in thin highly-faulted seams.

this combination provides potential access to billions of additional tonnes of coal in the UK without the environmental impacts of conventional underground or open cast mining

These words were not present in the Linc announcement to the ASX last night.

Another thing to bear in mind. Despite the hype, Linc are only intending to use these fuel cells where they have a GTL plant which produces surplus hydrogen. They are not seeing it as the primary means to generate electricity from syngas, this will be done using conventional gas turbines etc.

Quite a lot has been going on with UCG in Oz. For example, Cougar Energy's trial plant has been shut down ostensibly for environmental reasons. This is part of the on-going "war" with the CSG industry in Queensland.

However, for Linc Energy things are looking rather good.

Firstly, according to this Australian press article, tomorrow should see the signing of a deal with Adani Enterprises of India which will raise around $1bn cash from the sale of a thermal coal property.

http://www.smh.com.au/business/linc-adani-complete-their-coal-connection-20100801-111d7.html

There are two other properties also in the process of being sold, which may fetch another $1bn odd.

Then secondly, the company is due to spud a conventional gas well in Alaska in September which is targeting a potential 1 TCF.  The location is very monetisable, being 2 miles from a under-utilised pipeline which feeds Anchorage, where gas prices are currently around $7/mcf.

http://ir.geopetro.com/phoenix.zhtml?c=196336&p=irol-newsArticle&ID=1447180&highlight=

So, the best case scenario is that in say 6 months time Linc will have a) $2bn in cash and b) substantial cash flow from nat gas production sold at a premium price. Quite a platform for pursuing the UCG->GTL dream ...

The stock has been going up recently and closed last night at A$1.90, so with around 520m shares out that gives you a market cap of A$990m.

Here you go.

"LNC sells Galilee Coal Tenement for $3 Billion"

http://www.stocknessmonster.com/news-item?S=LNC&E=ASX&N=222623

The "$3 Billion" is not all in one go. Most of it's in the form of a 20 year royalty, with "only" $500m up-front. Still, that's quite a chunk of change to be playing with, and there are two more property sales pending.