The Illinois-based research company has signed a memorandum of understanding with Australian exploration company Greenpower Energy to jointly test and develop the oxidative hydrothermal dissolution process.

Greenpower described the OHD technology in a statement released on Tuesday.

“OHD is a novel and environmentally friendly technology for the conversion of coal and other solid organic material into low molecular weight, water soluble products,” the company said.

“Many of the initial products are potentially useful for producing polymers as well as other hydrocarbon based products.

“The process works by taking the initial macromolecular solid material such as coal and causing a reaction with small amounts of oxygen in high temperature, high pressure water.”

The deal gives Greenpower an exclusive license to develop and apply the OHD process on a commercial scale in Australia and New Zealand.

“Thermaquatica’s OHD process has the potential to be scaled up to a point where substantial amounts of oil can be produced using coal,” Greenpower chief executive officer John Watts said.

“A substantial amount of work is required before a commercial realisation is achieved but we feel this mutually beneficial agreement will hasten development.”

The process was developed by Thermaquatica in conjunction with Southern Illinois University.

SIU holds the patent for the process and previously granted Thermaquatica a universal license over the process to enable its commercialisation.

Greenpower plans to test the technology using its lignite resources in Australia, a total of 573 million tonnes of JORC-compliant inferred resource within its exploration areas.

“The company has been seeking an appropriate process to convert lignite into liquid hydrocarbons for transport fuels in an environmentally acceptable manner,” Greenpower said.