The company has identified potential UCG sites situated on Greenpower Energy’s (Greenpower’s) Victorian coal tenements and has issued an initial selection notice to Greenpower over EL4500 under an existing heads of agreement (HoA) entered into in August 2009.
It is proposed that the current HoA with Greenpower will be converted into a formal joint venture (JV) agreement on the same terms and conditions as the existing HoA. As per the terms of the existing HoA, CGE and Greenpower intend to enter into a JV agreement whereby CGE will commit to expend $1.25m within a 5 year period to earn a 75% interest in the selected coal tenements.
Following the initial preparation work, CGE intends to fund and work towards the design, engineering, construction and commissioning of a 1PJ UCG pilot plant. Upon commissioning of the pilot plant, CGE will undertake a feasibility study for the construction of a commercial UCG Syngas plant in the range of 5-50PJ per annum.
Greenpower will be offered the opportunity to jointly fund the commercial plant on the same percentage ownership of the JV. In the event Greenpower does not wish to participate in funding the commercial plant CGE may increase its interest in the JV to 85%.
CGE said that it has chosen to pursue its commercial project in Victoria due to the unlikelyhood of any commercial UCG project(s) in Queensland in the near future due to the state government’s UCG policy. CGE will continue to develop its Queensland coal assets with the first stage of the drilling programme.
CGE has commenced work on a site characterisation and analysis programme to identify the ideal location or locations on Greenpower’s coal tenements for the proposed UCG project. This is the initial step in working towards a UCG pilot plant, which can be scaled up to a commercial UCG plant capable of producing large quantities of syngas. It has also commenced discussions with third parties to participate in the development of a new 400MW UCG syngas-fed power station for Victoria.
