Leigh Creek Energy Project

 

Leigh Creek Energy Limited’s (LCK) flagship project is the Leigh Creek Energy Project (LCEP). 

The LCEP is developing three commercial opportunities:

  1. Supply of pipeline quality methane (natural gas) into the existing east coast pipeline network;
  2. Generation of electricity to industrial users in South Australia; and
  3. Ammonium Nitrate products

The LCEP sits within the existing Leigh Creek coal mine area, and will develop deep coal resources that are unable to be accessed by open-cut mining.  Energy will be produced from coal using a process known as in-situ gasification, or ISG. 

Figure 1: Leigh Creek Coal Mine

The ISG process converts coal from its solid state into its gaseous form, resulting in the production of Methane, or Natural Gas, along with other valuable gases such as Hydrogen. 

The gas produced from the LCEP will be transported via a new pipeline which will access the east coast gas network. Some gas produced will be used to create electricity on site for use within the project and for regional users.

 

Benefits of the LCEP 

The LCEP is a major project for South Australia that will deliver significant and long term benefits in the form of jobs and royalties.  By developing the deep, stranded and otherwise unusable coal, the LCEP will deliver a major new energy source, adding to South Australia’s already enviable reputation as a preferred location by major international energy producers and suppliers.  

The LCEP will deliver:

  1. Electricity generation for northern South Australian users;
  2. High volumes of low cost Methane (pipeline gas) to a market short of supply;
  3. Jobs in regional communities during construction and ongoing positions;
  4. Royalties; and
  5. Economic development for the town, region and state.

 

Why Leigh Creek?

Leigh Creek was chosen for the development of the LCEP after comprehensive analysis of resource development opportunities across Australia.  This analysis studied project factors pertaining to geological, environmental, technical, markets, infrastructure, regulatory, political, social and other factors that positively impact the speed and reduce risks associated with the project.  Key features that led to this choice were:

  1. South Australia was identified as the state which most supported natural resource development, and has a regulatory framework that assists in project development;
  2. The coal resource at Leigh Creek is large enough to support commercial ISG operations and is close to a major gas pipeline;
  3. Significant existing infrastructure including mining facilities, township, water and communications; and
  4. Independent work confirming the site’s ISG suitability has previously been conducted

 

Figure 2: Leigh Creek

The geology of the site is suitable for ISG, with:

  • A closed basin that is defined in size;
  • A thick, impervious seal rock;
  • No aquifers anywhere near the expected operational site;
  • Low permeability in the coal seam and surrounding rocks;
  • Thick coal seams of suitable quality for ISG;
  • Minimal fractures in the rock.

 

Project Stages
  1. Site Characterisation – substantially completed in 2016
  2.  

  3. Pre Commercial Demonstration - first quarter 2018
    1. Approval for initial gas demonstration
    2. Construction and installation of a single gasifier and associated infrastructure
    3. Operate for 30-60 days
  4.  

    Figure 3: Indicative view of the Pre Commercial Demonstration plant components

  5. Commercial Operations
    1. 2017 – initiate approvals for commercial operations – expected 12 month plus program
    2. 2018 - Secure funding and construct commercial facilities, being:
      1. Power Station
      2. Gas clean up facilities and associated infrastructure at LCEP
      3. Connecting pipeline
    3. 2019-20 – commercial operations; revenue generation is 35+ years

     

     


Project History

  • Project planning commenced in 2011. 
  • November 2014 – Petroleum Exploration License 650 granted by the State Government. 
  • July 2015 - LCK lists on ASX
  • September 2015 - LCK and Archer Explorations sign Heads of Agreement (HoA) to explore respective project synergies
  • October 2015 – LCK and EAS Advisers LLC sign Strategic Advisory Agreement
    • EAS is a boutique advisory firm based in New York (USA). EAS are well known for advising natural resources companies at relatively early stages through large-scale development.
  • November 2015 - Appraisal drilling on known coal deposits commenced . 
  • December 2015 - Inferred Coal Resource of 377 Million Tonnes (Mt) reported in accordance with JORC Code (2012).
  • December 2015 – LCK and APT Pipelines Limited, a subsidiary of APA Group (“APA”, ASX: APA) sign HoA, to allow the development of conceptual plans for the interconnection of the Leigh Creek Energy Project (“LCEP”) with the east coast gas markets.
    • APA is Australia's largest natural gas infrastructure business, owning and/or operating approximately $19 billion of energy assets. 
  • January 2016 - Achievement of a 2C SPE-PRMS ISG gas resource of 2,963.9 PJ reported in accordance with the Society of Petroleum Engineers - Petroleum Resources Management System (PRMS -  the internationally recognized standard for reporting oil and gas resources and reserves.
  • January 2016 - Stakeholder Engagement Plan developed
  • February 2016 - Scoping Study completed
  • February 2016 - Pre Feasibility Study commenced
  • February 2016 - Research and Development Working Capital Facility with Commonwealth Bank of Australia to bring forward access to refundable tax offsets of up to $4.0m.
  • April 2016 – LCK and Shanghai Electric Power Generation Group (SEC) sign HoA to form a Joint Venture company to build, own and operate a 300MW to 600MW power station at Leigh Creek.
  • April 2016 – Granting of Gas Storage Exploration License
  • April 2016 – Capital raise of $10.77m
  • June 2016 - Site Operations commence.
    • Environmental Program comprises 3 drill holes to enhance and validate previous information, and collect data for:
    1. Baseline environmental samples of rock and water;
    2. Groundwater, rock and geotechnical information; and
    3. Coal and overburden samples for additional detailed gasification analysis.
    • This information will inform hydrogeological, geological and geotechnical modelling and provide important information for the Environmental Impact Report for the Pre-Commercial Gas Demonstration Operations.
Figure 4: Drill rig on Leigh Creek minesite in October 2016 collecting baseline environmental data for the Pre Commercial Demonstration stage.

 

  • August 2016 - LCK commissions ElectraNet Pty Ltd (ElectraNet) to provide strategic advice and conduct studies on high-voltage electricity transmission and connection to the National Electricity Market (NEM).
  • August 2016 - LCK commissions CQ Partners Pty Ltd (CQ Partners) to provide strategic advice regarding market studies on peaking power in the NEM.
  • November 2016 – LCK awards first contract for the Pre Commercial Demonstration (PCD) plant for the LCEP
  • November 2016 - Innovation Australia awards LCK a “Certificate for Advance Finding” for the LCEP.
    • The Advance Finding entitles LCK to claim a refundable tax offset, or cash rebate, at the rate of 43.5% of costs incurred for up to three years commencing FY 2015/16, for total anticipated expenditure of approximately $21m to be incurred on the Pre Commercial Demonstration stage of the LCEP.
  • February 2017 - Shanghai Electric Power Generation Group (SEC) expands scope of power station to include a combination of gas and high efficiency coal fired power with solar and/or wind power.