Carbon Energy has entered into a Heads of Agreement (HoA) with Liberty Resources to establish a joint venture to develop Liberty's 338 million tonne thermal coal inferred resource in the Galilee Basin, Queensland. The company would hold 80% of the Joint Venture and is expected to be the operator.
The company, through its expertise in Underground Coal Gasification, would assess the optimal development of the resource. It would also execute the development plan, which includes application for a Mineral Development Licence to undertake a trial; design and construct a trial project; conduct feasibility studies into the commercial opportunities such as power generation, synthetic natural gas production, chemical production, liquid fuel production; and design and construction of commercial scale underground coal gasification facility.
Liberty holds an overlying Mining Development License Application (MDLA) in the Galilee basin (see attached map) and two granted Exploration Permits for Coal (EPC). It also has assessed these EPC to contain a JORC compliant estimate of 338 million tonnes of inferred coal resource. Liberty is expected to contribute 100% of the EPC’s into the joint venture. Liberty would be free carried through the initial assessment and trial phase which would involve some exploration drilling and the establishment of a trial plant capable of producing initially 1 and then 40 PJ per annum of syngas.
The two parties would contribute to the joint venture in proportion to their pro-rata interest. Furthermore, Carbon Energy would establish additional 40 PJ per annum pilots under the Agreement with Liberty. At this stage 4 other areas of interest have been identified by Liberty.
The Joint Venture project development would be subject to additional technical and market feasibility studies together with the appropriate government approvals, having regard for the Queensland Government’s UCG Policy and the interests of overlapping coal seam gas tenement holders. The JV would seek to obtain government approval and negotiate terms with the overlapping tenement holders in order to progress this development, which would take around 12 months to conclude. Succeeding the approvals and a successful trial, it is intended to expand the project to an initial capacity of 40PJ per annum, generating electricity and other products from syngas.
According to the HoA, the JV structure can also be applied to other areas in the Galilee, where Liberty has five EPC applications pending.
Andrew Dash, managing director of Carbon Energy, said: “This agreement is consistent with Carbon Energy’s strategy to obtain equity interests in additional coal deposits by leveraging off our leadership position in Underground Coal Gasification technology.”