Carbon Energy (ASX:CNX, OTCQX:CNXAY) is submitting the first Rehabilitation Status Report for its Bloodwood Creek underground coal gasification project in Queensland to the Department of Environment and Heritage Protection.
The report concludes the rehabilitation progress remains on track with many parameter levels being orders of magnitude lower than applicable Australian water quality guidelines.
In addition, the DEHP has scheduled further environmental soil sampling within the trial area, which the company expects will provide further evidence of its environmental credentials
Approval of the Decommissioning Report and Rehabilitation Plan for Bloodwood Creek is a key step for the company to proceed with commercialisation of its Blue Gum Project in the Surat Basin, which has the state’s fifth largest Proved and Probable (2P) Reserve of 1,128 petajoules.
The company has already prepared an Initial Advice Statement (IAS) for Blue Gum and is continuing its discussions with potential investment and offtake partners.
Earlier this month, Carbon Energy received a $2.5 million tax rebate under the Federal Government’s Research and Development Tax Incentive Scheme.
Proceeds from the rebate were used to repay the $1.2 million Macquarie Bank (ASX:MQG) loan facility.
Bloodwood Creek Rehabilitation
In October 2014, the company provided a Rehabilitation Plan to DEHP which marked the final step in meeting the recommendations as outlined by the Government appointed Independent Scientific Panel.
This is further supported by results from the first Rehabilitation Status Report.
In the past year, Carbon Energy completed a rigorous program of environmental testing and on the basis of those results is confident that the sampling by DEHP will produce results consistent with the site investigation report lodged as part of the Rehabilitation Plan.
The company has been conducting a trial of its technology for the past six years under intense scrutiny of the State Government and it remains actively engaged.
Blue Gum Gas Project
The Blue Gum Gas Project would be the first commercial UCG project in Australia with the potential to produce 25 petajoules of per annum of pipeline quality natural gas.
Carbon Energy is currently awaiting advice from the Department of Natural Resources and Mines in relation to its recommendations for commencing an Environmental Impact Statement for the Blue Gum Gas Project.
The project is planned for development on MDL374 and freehold land owned by the Company in the Surat Basin.
First gas could be supplied to local industry three years from commencement of the EIS process, assuming suitable investment partners are secured.
Analysis
Rehabilitation of the Bloodwood Creek underground coal gasification project is a key step in commercialising the Blue Gum Gas Project.
Already, the first status report has indicated that many parameter levels are orders of magnitude lower than applicable Australian water quality guidelines.
Carbon Energy had $1.69 million in cash as at 30th June 2015. CNX last traded at $0.016.
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