Leigh Creek Energy Ltd (ASX:LCK) has awarded two engineering, procurement, construction and management (EPCM) contracts for the stage-1 commercial development of the $2.6 billion Leigh Creek Energy Project (LCEP) in South Australia.
The LCEP commercial development stages comprises both upstream (underground ISG operations) and downstream (above ground urea manufacturing) components.
Stage-1 is a closed system power supply from a series of ISG wells (upstream) sufficient to power a 5-megawatt gas-fired power plant (downstream).
The company has awarded a contract to inGauge Energy Pty Ltd to managing upstream drilling services for the development of initial gasification wells to provide feedstock syngas for the 5MW power plant.
LCK has also awarded a contract to Prudentia Process Consulting Pty Ltd for managing the downstream selection, engineering, construction, and commissioning of the gas-fired plant.
“Another exciting milestone”
LCK’s managing director Phil Staveley said: “Awarding of the EPCM contracts for Stage 1 Commercial Development of the LCEP is another exciting milestone for the company, which we can now progress following the award of our Petroleum Production Licence on November 25, 2020.
“While our recently completed in-situ gasification (ISG) and urea production pre-feasibility study highlighted the strong economic returns and strategic rationale for the development of a urea production facility at the LCEP, these contracts start to bring it to life."
"Once the larger urea project is developed, the 5MW power plant will be used in the ISG process.
"With this LCK moves closer to becoming a significant supplier of low-cost, domestically-produced urea providing additional security to a critical product for the Australian agricultural sector.”
Staged project development
The LCEP sits within PEL 650 and PPL 269, which overlay the existing Leigh Creek Coalfield and the project aims to initially produce one million tonnes of urea per annum utilising ISG technologies.
Now that LCK has been issued with its Petroleum Production Licence (PPL) it is finalising the upstream ISG production Environmental Impact Report (EIR).
Stage-2 commercial development comprises large-scale gas drilling and production, plus construction of a 1 million tonnes/annum urea production facility.
The two commercial stages of the LCEP will be developed in parallel.
PFS shows robust economics
LCK recently completed a pre-feasibility study (PFS) on the urea production option, which highlighted the robust economics for the development of the project, which will provide fertiliser to domestic Australian and export markets.
The LCEP aims to initially produce 1 million tonnes/annum of urea utilising ISG technologies and the recently completed PFS outlined an average nominal production cost of $109/tonne, which places LCEP in the lowest cost quartile of the global urea cost curve.
LCK will separately contract for long-lead items that will then be managed by respective EPCM contractors.