Carbon Energy UCG Projects
update
UCG Association London March 2011
Cliff Mallett Technical Director
Disclaimer
The information contained in this presentation is given without any liability whatsoever to Carbon Energy Ltd or any of its related entities or their respective directors or officers,and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness orthoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the informationcontained herein and should conduct its own due diligence and other enquiries in relation to such information.
The information in this presentation has not been independently verified by Carbon Energy Ltd. Carbon Energy disclaims any responsibility for any errors or omissions in suchinformation, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of Carbon Energy that anyprojection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved.
Please note that, in providing this presentation, Carbon Energy has not considered the objectives, financial position or needs of the recipient. The recipient should obtain and relyon its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee’s objectives, financial position or needs.
This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefingprovided by Carbon Energy. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of CarbonEnergy.
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Competent Person
The information in this presentation (where it relates to resources) is based on information compiled by Dr C. W. Mallett, Executive Director Carbon Energy Limited who is amember of the Australian Institute of Mining and Metallurgy. Dr Mallett has sufficient experience which is relevant to the style of mineralization and type of deposit underconsideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves”. Dr Mallett consents to the inclusion in the presentation of the matters based onhis information in the form and context in which it appears.
The reserve estimates used in this document were compiled by Mr Timothy Hower of MHA Petroleum Consultants, Colorado, USA, a qualified person under ASX Listing Rule 5.11.Mr Hower has consented to the use of the reserve information contained within this document in the form and context in which itappears.
Important Statements
Carbon Energy is… Building a global energy company
• CORE BUSINESS Converting coal into syngas underground (UCG)
• Generating multiple uses for syngas – e.g. power generation, fertiliser production and gas-to-liquids (GTL) projects
• Creating global projects – based on resources, markets, partnerships
• Active in Australia, Chile, US, Turkey, India
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Carbon Energy Unique (originally) UCG Design
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Controlledin-panelreaction
Utilisingdeep coal
Produces Syngas for energy or feedstock
5MW power
station
Monitoring wells
Office & infrastructure
UCG panel
Underground
Aerial photo of CEL’s Bloodwood Creek UCG site
Accommodation
Steam +
O2
Product gas
to Main FLARE
Vertical injection well
STEAM & O2 INJECTION
Phase
January 2009
Reactor Growth during tests
Reactor position verified
DAY 140
late Feb 2009
BURN THROUGH
of monitoring
well No 6
Confirms reactor
position
Ground temperature
Cross-section line
BURN THROUGH
of monitoring
well No 6
Confirms reactor
position
Temperatures around cavity in 24 mths operation
REACTOR CAVITY
>50oC
26.5oC to 50oC
Temperature sensor
ZERO effect50m west of cavity
ZERO effect 60mabove cavity
ZERO effect50m east of cavity
Greater than 100oC12m above cavity asreactor passed under
Scale 30m
scale
70oC after 24 monthsIn reactor wall
<2oC rise after 20 mths10m east of reactor
coal seam
Ambient temperature ~ 26oC
coal seam coal seam
No effect 12m below seam
RL top of seam
UCG
Panel
RMS Amplitude
Amplitude
Anomaly
Over UCG
cavity
3D Seismic exploration
After – Peters T, Rich N, Strong S, 2010 Seismic reflection: A useful tool to assist UCG
Proceedings of the Bowen Basin Geologist’s Group Conference October 2010
Detail of 3D Seismic SurveyRMS Amplitude anomaly over UCG cavity
Monitoring wells
Design cavity
The anomaly is centered on the UCG cavity, but does not show edges precisely
Water Monitoring
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Bloodwood Creek• Over 50 monitoring devices in 30 water monitoring bores within an area of less than ½ square mile
• Monitor:- Water Quality- Groundwater Pressure- Gas Composition- Microseismic signals- Temperature
• 3 monitoring layers provide security in controlling the gasification process, maintaining operational parameters and preserving groundwater quality
Queensland resourcesInterest in 2,000 km2 of EPC’s but
drilled only small part
668 Mt
450 Mt Inferred
218 Mt indicated
(2m cut-off)
JORC compliant coal
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JORC practice
Proven
ore
Reserves(Recovery plan)
Measured mineral
resource
Indicated mineral resource
Inferred mineral resource
4km<250m <1kmCutoffs
for
grades
and
thickness
Petroleum Resources Management System
Discovered
petroleum
In
place
commercial
sub-
commercial
RESERVES
1P 2P 3P
Proven Probable Possible
Other undiscovered and unrecoverable classes
Contingent resources
1C 2C 3C
UCG Reserves Certification
Area Category Gross Gas PJ
Bloodwood Creek 1P Reserve (proven) 11.0
EPC 867 including 2P Reserve (proven + probable 743.9
MDL 374 3P Reserve (proven + probable+ possible) 1042.8
Additional resources 2C (Contingent) of 1927.7 PJ have also been identified in both
Bloodwood Creek EPC867 and Kogan EPC 869 areas
Independent certification – MHA Petroleum Consultants
for EPC 867 and EPC 869
In accordance with Society of Petroleum Engineers (SPE) guidelines the reserves are:
Key criteria- PRMS assessment
Coal resource base is JORC– 1P 2P 3P resource based on seams >5m
– 2C resource based on seams >2m
Active production requirement– Syngas and energy produced per tonne coal gasified
– Percentage of coal accessed by UCG required
– 1P only for existing UCG panel +2
Commercial requirement– Must have offtake/sales contract
Significant discount for UCG from 17300PJ insitu in coal
to PRMS syngas 2P of 744PJ and 3P 1043PJ + 2C 1928PJ
Current Domestic Operations – Kogan, Queensland
5MW Power Station (Phase 1)
• Commissioning of Panel 2• Commissioning of Gas Engines• Electricity Generation – power our site• Electricity connection into local Grid• Commissioning of Panel 3
25MW Power Station (Phase 2)
• Development Agreement already in place with Arcadia Energy Trading
• Power Purchase Agreement under negotiation• Project planning already commenced
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Chile – Mulpun Project
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• Agreement with Antofagasta Minerals S.A. to jointly assess and develop a coal deposit in Mulpun (near Valdivia)
• Located in southern central Chile, 800km south of Santiago
• Focusing on Power Generation
- Chilean electricity demand growing by 8% p.a.
- Currently reliant on imported coal, LNG and Diesel
• Environmental Approval Obtained for Pilot Project
Mulpun UCG site
Mainly cleared pastoral land and exotic forestry
Small remnants native forest
Water courses
Drill rig