Leigh Creek Energy Presentation HeadingLeigh Creek Energy
E cristian.bolda@lcke.com.au
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Disclaimer This presentation has been prepared by, or for Leigh Creek Energy Limited (LCK). It contains, and we may make other written or verbal forward looking statements with respect to certain of LCK’s plans, current goals and expectations relating to future financial condition, performance, results, strategic initiatives and objectives. By their nature, all forward-looking statements involve risk and uncertainty and are subject to factors that could cause actual results to differ materially from those indicated in this presentation and/or any statement, including forward-looking statements. Some of the factors that could cause actual results or trends to differ materially, include but are not limited to: price fluctuations; actual demand; currency fluctuations; drilling & production results, reserve estimates, loss of market, industry competition, market developments and government actions, environmental and physical risks, legislative, fiscal and regulatory developments, local, regional and international political, regulatory, economic and financial market conditions, political risks, the effect of information and technology and third-party service providers for certain of our operations and systems, legal proceedings and regulatory investigations, the impact of operational risks, including inadequate or failed internal and external processes, systems and human error or from external events (including cyber attack), risks associated with arrangements with third parties, including joint ventures, the failure to attract or retain the necessary key personnel; systems errors or regulatory changes, the effect of fluctuations in share price as a result of general market conditions or otherwise, the effect of simplifying operating structure and activities, the effect of a decline in any ratings or recommendations for losses due to defaults by counterparties or restructurings, on the value of investments, changes in interest rates or inflation, changes in equity and/or prices on our investment portfolio, the impact of natural and man-made catastrophic events on business activities and results of operations, reliance on our standing among customers, broker-dealers, shareholders, agents, wholesalers and/or other distributors of our products and/or services, changes to brand / reputation, changes in government regulations or tax laws in jurisdictions where we conduct business, the inability to protect intellectual property, the effect of undisclosed liabilities, the timing of any regulatory approvals, integration risk, and other uncertainties, such as non-realisation of expected benefits or diversion of management attention and other resources, relating to future acquisitions and/or pending disposals, project delays or advancement, approvals and cost estimates amongst other items and the cumulative impact of items.
While we try to ensure that the information we provide is accurate and complete, LCK advises you to verify the accuracy of any information and/or statement, including a forward-looking statement before relying on it. LCK has no obligation to update the forward-looking statements in this presentation or comm other forward-looking statements we may make. Forward-looking statements in this presentation are current only as of the date on which such statements are made.
This presentation may also contain non-IFRS measures that are unaudited, but are derived from and reconciled to the audited accounts. These should only be considered in addition to, and not as a substitute for, or superior to, our IFRS financial measures. All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated.
Gas Resources Compliance Statement
The PRMS resources estimates stated herein are based on, and fairly represent, information and supporting documentation prepared by Timothy Hower of MHA Petroleum Consulting, Denver USA. MHA Petroleum Consultants LLC is now part of Sproule International Limited. Mr. Hower is a member of the Society of Petroleum Engineers and has consented to the use of the Resource estimates and supporting information contained herein in the form and context in which it appears. All estimates are based on the deterministic method for estimation of petroleum resources.
LCK is not aware of any new information or data that materially affects this information and all the material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
Mineral Resource Compliance Statement
Estimates of Mineral Resources reported in this announcement are based on the latest information and data available. The recently updated Geological Model and JORC Resource Estimation report, prepared by Warwick Smyth and Lynne Banwell of GeoConsult Pty Ltd during March 2019 was used in this latest PRMS estimation. A copy of the GeoConsult report on the updated Geological Model and JORC Resource Estimation is available to view at www.lcke.com.au.
LCK is not aware of any new information or data that materially affects this information and all the material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
How does it work?
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How does UCG produce gas? • Underground Coal Gasification (UCG) or In-situ
Gasification (ISG) is a process that converts in-situ coal from a solid into synthesis gas (syngas)
• Directional drilling used for inlet/outlet
• Two possible CRIP designs (Linear and Parallel) • The coal is heated, and an oxidant is fed down the
inlet well, to feed the reaction • The chamber grows until the chamber size and
temperature is enough to start the chemical reaction
• The resulting syngas is extracted via the outlet well • The syngas composition can be varied, based on
pressures and water content
Underground Coal Gasification vs Surface Gasifiers Characteristic UCG Surface gasifiers
Coal mining & transport No coal mining required for UCG Coal mining, transport and treatment required adding to costs and environmental impact
Ground disturbance footprint Less area disturbed, as process occurs underground More area disturbed, as process includes overburden
removal, coal mining, coal haulage, storage, etc
Safety Minimal risk of safety incidents, as operations are contained underground, no mining activities means less safety risks
Higher risk of safety incidents due to mining activities and operating high pressure, temperature vessels on the surface
Removal of overburden No overburden removal required as the in-situ coal is converted into a gas and extracted via cased wells
Expensive overburden removal required increasing ground disposal footprint and rehabilitation costs
Reaction time for converting coal to syngas
Minutes, which allows sufficient time for the reactions to occur
Seconds, which does not allow enough time for all reactions to occur, resulting in lower quality syngas
Storage of ash and coal plant rejects
Coal ash & fly ash rejects left in underground cavity as only the gas is extracted
Need to transport and store/dispose of fly ash and coal plant rejects
Cost Less expensive as the main cost is the drilling of the wells
More expensive as the coal has to be mined, transported and treated prior to feeding into surface gasifier
Syngas quality Higher methane content due increased pressure with depth
Lower methane content due to lower operating pressures.
Coal depth Can be used for deep coals that are uneconomic for conventional mining
Can only be used for shallow coal deposits, to keep costs down
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Characteristic UCG Surface gasifiers Dust levels Less dust, as there are no mining activities More dust generated due to mining activities
Particulate Matter levels Less, as process occurs underground Particulate matter levels higher from mining activities. See graph below.
Groundwater No need for dewatering. Mining activity requires dewatering of the open pits and/or underground operations.
Coal geology Best used when coal deposit has little or no structures. Not suited for heavily faulted deposits.
Can be used in complex coal deposits with structures (i.e. faults, folding)
Greenhouse gas emissions Less GHG emissions as no mining activities occurs (see UCG-IGCC bar on graph) and there are no fugitive GHG emissions.
Higher GHG emissions generated (see IGCC bar on graph), by mining activities due to fugitive GHG emissions and GHG's generated by mining equipment from diesel usage.
Underground Coal Gasification vs Surface Gasifiers
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Economic advantages of UCG More economic than coal mining with no capital-intensive infrastructure
Commercial production proven
Produces far more gas from each well than CSG
Main advantage is the ability to utilize uneconomical coal deposits (>500m depth and low rank coals)
80% of the world’s coal deposits are uneconomic to mine, but maybe suitable for UCG
Most countries have coal deposits (economical and uneconomical), but no gas reserves. This allows most countries to produce their own gas using UCG
Producing gas allows these countries to improve their economies and be more self sufficient, without the impact of coal mining
Syngas is used as a feedstock by some industries (Fertiliser, explosives, etc.)
LCK syngas production cost expected to be under AU$2/GJ
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Environmental benefits of UCG UCG has a much smaller ground surface disturbance footprint than conventional coal
mining Minimal dust and noise generated by UCG activities compared to coal mining UCG infrastructure can be located away from environmentally sensitive area UCG does not require solid waste handling and disposal facilities (Overburden dumps,
ash dumps and tailings dams) Freshwater aquifers are not affected by UCG activities, if operated correctly UCG does not require dewatering of the coal seams and use far less water than coal
mining The GHG emissions from the syngas can be easily separated out and captured UCG has far less greenhouse gas emissions than conventional coal mining for power
generation. This includes fugitive emissions from the exposed coal and GHG emissions from the coal mining equipment
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• Carbon from Syngas + Hydrogen/Ammonia – Urea – Carbon reduction and offset activities = Carbon Neutrality
• Urea production requires 0.73t CO2 to produce 1t of urea(1)
Carbon reduction activities are:
Carbon Neutral by 2030
Leigh Creek Energy Introduction
Leigh Creek Energy is the first and only company in the world planning bring the Underground Coal Gasification process to large commercial scale fertilizer production in a high regulated country
Leigh Creek Energy is a South Australian based, ASX listed company (LCK)
Leigh Creek Energy is on track to commence commercial production of 1Mtpa of Urea (fertilizer) from it’s Underground Coal Gasification Syngas in 2024+
Leigh Creek Energy own 100% of the coal reserves , in South Australia, 550km north of Adelaide
The LCEP sits within PEL 650 and PPL 269, and contains a combined total of 1,153PJ of 2P gas reserves (PRMS converted 31% of coal reserves)
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finalised
All required inputs present on site
LCK performed a pilot project trial in 2018/2019 satisfying stringent conditions imposed by the South Australian Regulator, proving that it can operate safely and in full environmental compliance. The syngas quality was upgraded to 2P gas reserves of 1,153PJ plus indicated and inferred coal resources of 301.2Mt Syngas is expected to cost < AU$2/GJ
ISG technology has been developed over the last 100 years and is well proven in multiple jurisdictions
Leigh Creek Energy has the skills and experience required for ISG development
ISG demonstration plant successfully flowed gas in 2019
The South Australian Department of Petroleum, Mining and Energy has granted the Petroleum Production Licence, the final petroleum licence required for commercial upstream operations in November 2020
• Annual urea plant capacity of 1.0 million tonnes per annum
• Initial capital cost $2.3 billion
• Commercial life of over 30 years
• Nominal production cost of $109/tonne
• Hydrogen production potential
• Internal Rate of Return (IRR) 30%
Strategy to develop both upstream and downstream operations • Upstream: produce
commercial quantities of syngas using ISG technology
• Downstream: construct a urea plant using syngas as feedstock
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Prove gasification capability
Stage 1 Commercial Development
Large scale gas + urea production
Commercial urea production • 30+ further gasification wells • 100MW gas fired power plant • Construct urea plant • Strategic partner
Further de-risking gasification process (IN PROGRESS) • Drill up to five more gasification wells • 5MW gas fired power plant to power the project • Further improve technical capability • Confirm to stakeholders that LCK can operate multiple
gasifiers
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Economics of UCG
Capital cost of a long life parallel CRIP gasifier ranges from approximately AU$2.7 to AU$4.5 million, depending on the length.
Each gasifier can produce between 4 and 11PJ of syngas, depending on the length of the gasifier, over an operating life of greater than 10 years.
This capital cost equates to approximately AU$1.00 per GJ of syngas produced, with total capital and operating cost <AU$2 per GJ.
LCK plans to operate approximately 35 underground gasifiers with an additional 5 to 10 on standby.
LCK will be utilizing mainly parallel CRIP gasifiers, as they are better suited to the geology than linear CRIP gasifiers.
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Takeaways
Increased demand for gas has resulted in the need to locate more supplies of gas UCG has many environmental, economic and safety benefits when compared to coal
mining UCG allows uneconomic coal deposits to be utilized for gas generation Australian regulations can be duplicated, and the Australian regulator third party expert can
be used by in-country regulator for UCG LCK expertise can be utilized by coal owners (private and state) for streamlining the
pathway from concept to production with our proven expertise in deposits assessments, engineering, gasification, power, fertilizer,.. production from syngas
Any further information, a more detailed presentation can be organized – please contact cristian.bolda@lcke.com.au
Leigh Creek Energy Limited (ASX: LCK)
Thank you
Questions?
Leigh Creek Energy Limited L11, 19 Grenfell Street Adelaide SA 5000 Phone +61 (8) 8132 9100 Email contactus@lcke.com.au Website http://www.lcke.com.au/
Cristian Bolda GM Operations cristian.bolda@lcke.com.au
Parallel CRIP operation
Economic advantages of UCG
Environmental benefits of UCG
Carbon Neutral by 2030
Leigh Creek Energy Introduction
Leigh Creek Energy Project
Economics of UCG