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OIL & GAS | Leigh Creek Energy
LEIGH CREEK ENERGY Commercialising East coast Australia’s largest uncontracted 2P gas reserve
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OIL & GAS | Leigh Creek Energy
Leigh Creek Energy (LCK) is an ASX-listed energy company that is making rapid progress towards realising a goal it set almost a decade ago. That goal is to successfully deliver its Leigh Creek Energy Project, located within a former coal mine 550 km North of Adelaide in the state of South Australia. The project is based on a process called in situ gasification (ISG), which converts deep and difficult to obtain coal from its solid state into synthesis gas (syngas) – a lower carbonemitting form of energy compared to thermal coal. In the first quarter of the year, Leigh Creek achieved first commercial production-grade syngas from its demonstration plant and had its resource at the site independently certified as the largest uncontracted 2P gas reserve serving the East Coast market. These present two major milestones for the company in terms of proving the commercial viability of the project and underlining its importance to the starved domestic energy market. RGN’s editor finds out more on the continued progress made by Leigh Creek this year in a discussion with managing director Phil Staveley.
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OIL & GAS | Leigh Creek Energy
Figure 1 Jacob Ambrose Willson: Leigh Creek
sum of proved and probable reserves - ed].
achieved first commercial syngas production from the demonstration
• Produce syngas comprising energy gases
plant in February 2019. What were the
of carbon monoxide, methane, nitrogen
key achievements from the trial and how
and hydrogen
important was its success to the future success of the project?
• Produce syngas at over 1 million cubic feet per day • Capture information required to upgrade
Phil Staveley: The company’s plan to run a
the existing SPE-PRMS 2,964 PJ 2C
Pre-Commercial Demonstration (PCD) was
resource to 2P reserve
to demonstrate to the regulator and the
• Demonstrate that LCK can operate the ISG
wider community that we could utilise ISG
gasifier safely and in an environmentally
for commercial use in an operationally and
responsible manner
environmentally safe way, but also produce targeted commercial quality and quantities of
• Provide key data and information for the development of the commercial project
gas to have a portion of its sizeable resource upgraded to reserve status. JAW: The company was able to upgrade The objectives (see bullet points) were all
the resource making it the largest
achieved, and LCK subsequently received
undeveloped 2P gas reserve available to
third-party validation of a PRMS certification
the East Coast markets. How important
of 1,153 petajoule (PJ) 2P reserve [2P is the
is the scale of this resource, given the
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Figure 2
current critical energy situation in the
about the petroleum accumulation at
region?
Leigh Creek is established. This additional information will be derived from a variety
PS: Australian natural gas demands have
of sources, such as further drilling, seismic
increased around 300% since 2014, and an
work, and production testing.
undersupply in the domestic market means there is an urgent need for large-scale
Figure 2 shows LCK’s reserve in comparison
pipeline gas supplies.
with other gas suppliers in Australia. The first six producers are primarily contracted for
There are also limitations for significant
LNG exports, while the rest are primarily for
exploration and extraction within regulatory
domestic use.
framework in other states (see figure 1). JAW: At the end of June, the company LCK’s 2P reserves of 1,153 PJ (1.1 Tcf) is a
was able to successfully decommission
significant number, capable of producing and
the PCD project. How vital was it to
maintaining a commercial project for at least
sign off the project with no significant
30 years.
environmental or safety incidents?
Furthermore, LCK’s PRMS reserve certification PS: The company’s successful PCD justifies will increase over time as more information
commercial suitability and provides evidence
OIL & GAS | Leigh Creek Energy
Resource Global Network of how a commercial ISG project can operate
you’ve already had discussions in Hong
safely in accordance with environmental and
Kong and Beijing?
regulatory guidelines. PS: The reserve certification has allowed We have a track record beginning in April
commercial negotiations with bankable
2018 when the regulator looked at the
partners, mainly due to the booking of LCK’s
science and backed our expert staff with
maiden reserve. A reserve means the gas
an environmental approval. The reserve
has been independently qualified, assessed
certification now justifies their decision and
or judged to be of a commercial grade,
shuts the door on any argument suggesting
suitable for a commercial project.
ISG can’t operate in a commercial application safely and within environmental standards.
Partners wanted to see that the gas could be commercial before they would formally and
JAW: How symbolic is this move in terms of Leigh Creek transitioning towards commercial negotiations, particularly as
seriously negotiate.
OIL & GAS | Leigh Creek Energy
JAW: What are the company’s targets for
In 2020, the company will complete its
the second half of the year and then into
pre-feasibility studies, have submitted
2020?
appropriate applications to government and announced relevant commercial
PS: 2019 will see Leigh Creek Energy
partnerships.
complete its options analysis, which will determine its preferred commercial pathway
JAW: How prepared is Leigh Creek for any
between pipeline gas, urea fertiliser, or both.
form of speedbump that may slow down
All these options show significant economic
the pathway to commercial production?
perspectivity. PS: LCK is writing the blueprint for The remainder of 2019 will see our
commercial success using this technology
technical team engage in more geotechnical
in Australia, and as is the case with new and
investigation, and progress towards
unconventional developments, we have
applying for appropriate permits from
to often face and solve issues subsequent
the state government regulator to move
developers don’t have to deal with.
forwards towards commercial operations. Our executives continue to progress with
This is why the PCD was so important – not
commercial negotiations.
only to demonstrate to the regulator and
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the wider community that we could utilise
JAW: You previously identified two
the technology for commercial use in an
potential commercial pathways for your
operationally and environmentally safe and
syngas product - fertiliser (urea) and
sustainable manner, but to understand and
natural gas. Which market do you think
react to any issues that could potentially arise
your product is best suited to?
on a larger scale. PS: The most financially attractive To successfully operate the PCD and get
commercial direction for LCK is to maximise
this far is a huge achievement and speaks
the value of the company’s vast gas resource
volumes of the quality of staff and technical
at Leigh Creek and to turn this asset into
knowledge under the LCK roof.
fertiliser products on site. Factors influential in this decision include existing transport
They’ve proven to be fully equipped to react
infrastructure which enables LCK to access
accordingly to any unexpected hurdles that
markets for the product mix, demand for
any company may face when pioneering
the product with stable pricing, and LCK’s
a relatively little-known and innovative
natural advantage in having a large feedstock
technology.
resource that can be used in production at a very low price.
OIL & GAS | Leigh Creek Energy
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“LCK’s past financial year has featured our greatest achievements to date and our most significant steps forward towards realising a goal set almost a decade ago” Phil Staveley, managing director Leigh Creek Energy
OIL & GAS | Leigh Creek Energy
However, our recent reserve certification
Leigh Creek is generating excitement from
cements LCK’s project status firmly in the
potential end markets. Couple that with the
gas market in Australia too. The company
fact we can produce it cheaper than anyone
is working through negotiations with gas
else in the industry certainly means the
purchasers who are seeking a material
option must be considered and carefully
amount of gas supply, while we progress
analysed.
the dual path and scoping aspects of a compelling fertiliser strategy.
However, our greatest potential for value creation means our preferred commercial
JAW: When RGN last spoke to Leigh Creek
pathway will be along the pipeline gas and/or
in 2018, another possible commercial
urea fertiliser production sectors. Ultimately,
route discussed was that of hydrogen
our remote location and the infancy of
production. Is this still an option being
technology solving hydrogen transportation
considered by the company?
issues means hydrogen may not be as viable an option for LCK right now.
PS: As we’ve mentioned previously, the volume of hydrogen potentially produced at
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JAW: Finally, can you summarise how
But seeing the growth of the company, the
excited everyone at Leigh Creek is
high calibre of experts working towards the
following the recent progress made
common goal and everyone knowing we’re
towards the commercial project?
closer than ever to achieving something significant certainly makes us excited.
PS: LCK’s past financial year has featured our greatest achievements to date and our most
Our position also makes us more determined
significant steps forward towards realising
than ever to make the most of the huge
a goal set almost a decade ago. Those of
opportunity we’ve created for ourselves, the
us at LCK who were here at the beginning
Australian resource sector and the global ISG
understood the enormity of the challenge
industry.
they faced trying to commercialise an ISG project in Australia.
ASX:LCK
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Published by Anderson Murray Media Ltd
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