Linc takes UCG division overseas

AFTER 14 years of successful technology development, Linc Energy is closing down its Chinchilla underground coal gasification pilot plant, with CEO Peter Bond blaming regulatory uncertainty in Queensland.

Blair Price

Key achievements at the plant include its pioneering production of clean diesel and jet fuel from UCG, while the closure comes after two years of continuous operation of Linc’s latest-generation Gasier 5 technology.

Bond said it was with regret that the G5 technology would be taken offshore.

While the Queensland government ushered in UCG to help monetise stranded coal resources, Bond said there was regulatory uncertainty for this sector in the state especially over the last several years.

“I do not believe that we have been afforded a level playing field or offered a ‘fair go’ with access to the basic right of statutory due process,” Bond said.

“As a result, the board has taken the heavy decision to continue to drive the UCG business offshore, thereby ensuring the future deployment of UCG in regions like Asia, which are seeking long-term energy security and cost independence from rising prices of natural gas and LNG.

“The decommissioning of Chinchilla is an emotional event for the Company and for me personally. We have spent many years and a lot of money and effort developing something unique and special in the form of UCG at Chinchilla. I had hoped that this would be something that all Australians could be proud of and that would continue to grow and expand for many years to come. However, due to the lack of industry structure, we have now been forced overseas.”

Bond expects that gas-poor but coal-rich nations will ultimately benefit from Linc’s advances in UCG technology, including Poland, China, Hungary, Ukraine, South Africa and Vietnam.

He also flagged that Linc’s foray into large gas-consuming Asian markets could make it directly compete with Queensland’s LNG scene.

“Ironically, the high cost of LNG industry development in Queensland today, which is depending upon growth in Asia, is a pointer to why regions like Asia will need UCG to help level the energy playing-field in the future,” Bond said.

“This is why it makes sense to move a big part of Linc Energy's UCG operations to areas such as Asia now.”

The Queensland government’s stance on UCG changed following the water contamination incidents experienced at Cougar Energy’s Kingaroy pilot plant in 2010.

In July, the government released the findings of an independent scientific panel into UCG, which included a key finding that no commercial UCG plant should start up “until decommissioning can be demonstrated”.