INVESTOR PRESENTATION 8-10 SEPTEMBER 2008

Transcription

1 Carbon Energy Limited ABN Registered Office: Unit A2, 118 Railway Parade West Perth WA 6005 Australia PO Box 1785 West Perth WA 6872 Tel: +61 (08) Fax: +61 (08) September 2008 ASX Announcement ASX: CNX INVESTOR PRESENTATION 8-10 SEPTEMBER 2008 Please find attached a copy of Carbon Energy Limited (ASX: Code CNX) Investor Presentation to be used during a briefing for investors from 8-10 September For and on behalf of the Board I.W. Walker Managing Director cc: Directors COMPANY PROFILE Carbon Energy is a growing energy company aiming to deliver low cost and environmentally sustainable syngas from coal. Carbon Energy s unique approach to UCG and syngas production produces a low cost option for capturing CO 2, making it a leader in clean coal technology. Carbon Energy s ambition is for syngas to become the preferred feedstock for producing clean coal power stations, an alternative to oil-based fuel, agribusiness products (fertilisers & explosives), polyolefin products (such as plastics) and allowing for economic carbon capture. Carbon Energy s technological advantage comes from its association with CSIRO including world class geotechnical, hydrological and gasification modelling capabilities. Located at the hub of the Surat Basin s energy infrastructure, Carbon Energy s energy resources are perfectly positioned to provide the basis for future energy, industrial and agricultural chemicals, and liquid fuels for export and to the growing local industrial hub. Competent Person Statement The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr I.W. Walker, Managing Director Carbon Energy Limited who is a member of the Australian Institute of Geoscientists. Mr Walker has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Walker consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. Brisbane Office: Technology Transfer Building, Queensland Centre for Advanced Technology. 1 Technology Court (off Bainbridge Drive) Pullenvale QLD 4069 Tel: Fax:

2 Carbon Energy Investor Presentation Andrew Dash: Chief Operating Officer Rusty Mark: General Manager Business Development SEPTEMBER 2008 insert presenter insert date

3 Carbon Energy Limited (CNX) Carbon Energy is an emerging energy company whose purpose is: To produce clean energy and chemical feedstock from UCG syngas Transforming from a minerals focus to an energy focus Focusing on our UCG technology and coal resource opportunities Developing strategic partnerships to gain access to downstream technologies and access to markets Currently conducting feasibility studies into a number of commercialisation projects 1

4 Carbon Energy Limited (CNX) ASX listed ticker code: CNX (formerly Metex Resources Ltd:MEE) Shares on issue: million CSIRO holds 18.6% Incitec Pivot Limited holds 11.2% Market Capitalisation: $245 million per share) Cash Position: $19.6 million cash at bank Approximately $8 million required to complete trial 2

5 Carbon Energy Ltd Brisbane Based Management Team Andrew Dash, Chief Operating Officer, has over 17 years experience in Australia s energy industry and has been involved in all aspects of business management including strategic planning, commercial development, project management & operations. Andrew is responsible for the overall management and performance of Carbon Energy s UCG business and is also a director of CNX Dr. Cliff Mallett, Executive Director, has more than 38 years of experience in the mining and energy research forums. He was formerly Acting Chief of the CSIRO Division of Exploration and Mining, Executive Manager of the Queensland Centre for Advanced Technologies and interim CEO of the Centre for Low Emission Technology. Cliff is responsible for expert advice on coal geology, the science of UCG and process design. Rusty Mark, GM Business Development,has 14 years experience in the minerals and energy sector, including leading approvals processes for major projects in power, coal mining, coal seam gas and waste management. Rusty was project leader for CSIRO s environmental assessment of UCG and then later consulted to CSIRO on the commercialisation strategy. Rusty s responsibilities include business development, strategy and downstream commercialisation of UCG. John Wedgwood, GM Operations, has over 25 years international experience in the energy and telecommunications industries as well as an Officer in the Australian Armed Forces. John is responsible for the project management and operation of the Bloodwood Creek trial as well as the development of Carbon Energy s projects throughout Australia and overseas. Burl Davis, UCG Process Consultant, has over the past twenty years served as Technical Director of several significant and successful UCG field test programs in the U.S. and New Zealand. Burl is responsible for providing expert advice on UCG process design and operation. 3

6 Agenda UCG Overview Carbon Energy s UCG Credentials Strategy Summary 4

7 UCG Overview What is it? UCG is the gasification of coal underground the energy in coal is extracted without the environmental impacts associated with coal mining. Gasification is a process where Oxygen and Steam react with coal at high temperatures an energy rich gas mixture is produced called Syngas. UCG Syngas is comprised of four gases Hydrogen, Carbon Monoxide, Methane and Carbon Dioxide. Carbon Dioxide is removed (and in future sequestered/stored) the remaining gas is 50% Hydrogen by volume (the target gas for the manufacture of ammonia) 5

8 UCG Overview Energy Recovery Comparison Energy Extraction by Method for Typical 12 km 2 Deposit Energy in PJ Coal Hydrogen CO Methane UCG Mining CSG 6

9 UCG Overview The Opportunity Energy dynamics shifting globally Demand is increasing with major supplies diminishing (eg oil) Price is increasing Australian prices for oil and LPG currently reflect world parity pricing and coal and natural gas prices are heading for world parity pricing Commercial impact of increasing energy prices on major energy users and those relying on oil and natural gas as feedstock Increased focus on carbon emissions and emerging carbon trading schemes UCG offers the potential to unlock a huge additional source of energy from coal that: Is low cost Suitable for energy markets (eg power generation, liquid fuel production) Can be used in feedstock markets (eg ammonia production, plastics etc) and Provides a pathway to low carbon emission energy solutions by providing a low cost carbon capture mechanism. 7

10 UCG Overview Environment Lower CO 2 emissions for power stations Reductions of 10 20% compared to conventional coal Addition of carbon capture and storage achieves up to 70% reductions over conventional coal and ~20% over gas. Impacts on local ground water are managed to ensure there are no adverse outcomes Surface subsidence minimised or eliminated through operational design Reduced impact on land and land use during operation Substantially smaller footprint compared to underground coal mining 8

11 UCG Overview Lowest Cost Clean Coal Technology UCG achieves clean coal outcomes with a 30% to 50% saving on capital and a significant reduction in surface and water impacts associated with mining. 9

12 Carbon Energy Credentials UCG Background 10 years of scientific research into UCG internationally Development of proprietary modeling tools for UCG site selection and process modeling Commercial scale trial at Bloodwood Creek enhancing established techniques enables efficacy of modeling tools to be demonstrated successful application of novel design utilising directional drilling Development of propriety construction and operating technologies, such as controlled retraction point injection (CRIP) Health, Safety and Environment focus for future coal developments 10

13 Carbon Energy Credentials Strategic Relationships Historical CSIRO link Carbon Energy s technology is based on 10 years of international research carried out by the CSIRO Proprietary modeling packages for site selection, process design and process control were developed Carbon Energy has the exclusive rights to these modeling packages and is the owner of all associated intellectual property Initial strategic partnerships Incitec Pivot Limited (IPL) for ammonia production and off take arrangements Thomas & Coffey on project management and construction for Bloodwood Creek trial Constellation Energy Pty Ltd (Mitchell Drilling) for drilling 11

14 Strategy for Growth Continuous improvement of UCG technology and development of complementary technologies Establish and maintain leadership position in UCG technology Develop options for carbon capture and storage Expand Resource Base Exploration of existing and new acreage Leverage UGC capability to earn equity in new coal resources Active programs within Australia and overseas Develop & Execute Commercial Projects Develop projects to financial close strategic partners providing access to technology and markets Management of construction and ongoing operations Quality communication with all stakeholders on performance & developments 12

15 Improvement of UCG Technology Carbon Energy Competitive Advantage Based on 10 years of research into 50 years of operational data, Carbon Energy has developed: Superior site selection and site characterisation capability + COSFLOW (modeling package) coupled ground behaviour prediction = Environmental Excellence Advanced gasification modelling + UCG reactor design. = Technical Excellence Applicable to coal anywhere in the world to produce high quality fuels and feedstock. = Business Excellence 13

16 Carbon Energy Design Tools Process simulation Regional hydrology model Geotechnical model Coal model Cavity model

17 Carbon Energy 1PJ UCG design 14

18 Improvement of UCG Technology Bloodwood Creek Demonstration Trial Objectives Demonstrate 1PJ pa commercial module design. Confirm performance (operational and economic) for Incitec Pivot Limited (IPL) feasibility studies. Confirm performance of directional drilling and lining technologies Confirm conversion of coal reserves into gas energy 100 mt in situ = +1000PJ recoverable Demonstrate environmental performance 21 monitoring wells 16

19 Improvement of UCG Technology Bloodwood Creek Demonstration Trial Directional Drilling Pipe Racks looking towards flare site 17

20 Improvement of UCG Technology Bloodwood Creek Demonstration Trial Pipe Racks (very straight!) Diesel and LPG for Boiler Water Storage 18

21 Improvement of UCG Technology Bloodwood Creek Demonstration Trial Oxygen tanks Boiler for Steam Injection 19

22 Improvement of UCG Technology Bloodwood Creek Demonstration Trial Milestones Identify Coal for Ammonia Plant Site Characterisation Completed in May UCG Directional Drilling Programme Completed 28 August Demonstrate Gasification Initiation Due 1 October Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Site Characterisation Demonstrate Commercial Gas Supply 20

23 Expand Resource Base Strategic Options Increase drilling on current Exploration Permits for Coal (EPC) to achieve 300+ million tonnes Add acreage through acquisitions and farm ins Investigate domestic opportunities throughout Australia Develop overseas opportunities India, China, USA 21

24 Expand Resource Base Tenure Security The issue of overlapping tenements has existed between minerals companies and energy companies, including coal miners and Coal Seam Gas (CSG) producers, for many years This has been historically resolved by the parties signing Co ordination Agreements, as prescribed under the legislation We see no reason why this process cannot be successfully applied for UCG and CSG companies. We are liaising with Government and other industry stakeholders to achieve this outcome. 22

25 Expand Resource Base Australian Tenements 23

26 Singareni (SCCL) India MOU signed with SCCL to jointly investigate UCG on their coal leases UCG Feasibility study funded by Australian Government 90m m 5m GORRIPETA VAGU 30m 5m Identified Manuguru coalfield with >300Mt unmineable coal (not JORC compliant) 5m 5m 30m 40m Initial development 25MW station being assessed 90m 10m A A B B C C CONCEALED BASEMENT HIGH INCROP OF 20m 10m INCROP OF BOT SEC OF Expand Resource Base India SEAM BOTTOM SEC 650m DEPTH LINE OF T F25 F36 F26 F26 F22 F26 F25 F20 F22 F75 F20 F19 F26 F17 F18 F38 F76 F16 F17 F77 F8 F F14 F8 F76 F77 F10 F10 F78 650m DEPTH LINE OF THICK SEAM BOTTOM SECTION F77 F12 F11 F14 F78 F12 F77 F10 F10 F13 F8 F4F5 F78 F8 F7 F4 F3 F5 F2 F3 F6 F1 F2 F1 90m 22m 20m m WIDE BARRIER 25m 23m 5m20m 20m 25m 18m 60m 100m 65m 25m 10m 20m 60m 70m 15m 40m 15m 25m 15m 10m 40m m depth 20m SECTION-II OF THICK SEAM ABC A BC A BC A BC A BC A BC INCROP OF INCROP OF SECTION-II OF THICK SEAM 300m DEPTH LINE OF THICK SEAM 300m DEPTH LINE OF THICK SEAM SEC OF THICK SEAM ROOF LIMIT OF THICK SEAM AGAINST BASEMENT HIGH FLOOR LIMIT OF THICK SEAM AGAINST BASEMENT HIGH F35 F38 F37 F39 F37 F40 F32 F35 F34 F34 F24 F23 F24 20m20m m THICK SEAM SEC OF THICK SEAM PK-1 MINE BLOCK PK-2 MINE BLOCK faults Godavari River ABC A BC Block B APT Block A 702 Block C Cleat Orientations Thick seam PK1 0m 500m 1000m thickness (m) OPEN CUT IV Geothermal Gradient C/m 0.02 to to to to to Manuguru Coalfield, India Showing coal seam thickness and geological structure, with 3 potential UCG sites which have been modelled 24 ROAD TO KOTHAGUDEM INCROP OF BOT

27 Develop Commercial Projects Opportunities Power UCG profitable and has better economics than competing clean coal technologies. Ammonia global demand increasing current price to US$500/tonne. UCG delivers above average US$350/tonne. Liquid Fuels At $100+/bbl global demand exceeding production. UCG delivers above average return on capital at $50/bbl 25

28 Develop Commercial Projects Leading Contenders Ammonia MOU executed with Incitec Pivot (IPL) 1,000 tpd world scale plant as the basis for feasibility study for Bloodwood Creek Methanol The key to industrial chemical production Carbon Energy assessing options for commercial development Next Steps 6 12 months, small scale power station plus carbon capture and storage strategy 1 3 years, medium scale chemicals production 3 5 years, world scale ammonia and chemicals production 26

29 Summary World leading UCG technology currently being demonstrated on a commercial scale in QLD Substantial coal resource in QLD identified for development We will seek to grow our resource base both domestically and overseas. Strategic partnerships established with major industry players Providing access to downstream technologies and markets in Australia and overseas Focused on rapid commercialisation of UCG technology and access to additional coal resources 27

30 Disclaimer The information contained in this presentation is given without any liability whatsoever to Carbon Energy Ltd or any of its related entities or their respective directors or officers, and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information. The information in this presentation has not been independently verified by Carbon Energy Ltd. Carbon Energy disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of Carbon Energy that any projection, forecast, calculation, forward looking statement, assumption or estimate contained in this presentation should or will be achieved. Please note that, in providing this presentation, Carbon Energy has not considered the objectives, financial position or needs of the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee s objectives, financial position or needs. This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Carbon Energy. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of Carbon Energy. 28