LINC ENERGY LTD // 2009 ANNUAL REPORT

04REVIEW OF
OPERATIONS
AND ACTIVITIES
Leading a new industry
Linc Energy is an innovative, forward-thinking company
developing a significant energy business based on the
production of cleaner energy solutions.
Underground Coal Gasification (UCG) is a unique
technology that provides access to coal deep underground,
otherwise inaccessible using traditional mining methods.
Linc Energy accesses this coal by in-situ gasification to
produce a high quality synthesis gas (syngas). Syngas
contains key ingredients carbon monoxide and hydrogen.
Aboveground, UCG syngas is processed in a Gas to Liquids
(GTL) plant using Fischer-Tropsch technology to produce
high quality, sulphur free, synthetic liquid hydrocarbons.
UCG syngas is a suitable feedstock for Linc Energy’s
GTL process to produce cleaner liquid transport fuels
such as synthetic diesel and jet fuel. Syngas is also an
ideal feedstock for combined cycle, gas turbine power
generation. It is also a valuable feedstock for the production
of a range of other chemical and energy commodities.
The 2008–2009 financial year was indeed one of growth
for Linc Energy. Linc Energy grew in experience and
in employee numbers. It has been a year of important
technological achievement with some very significant goals
and challenges achieved and met. Linc Energy is impatient
to achieve its goals towards commercialisation and the
focus for the next period is firmly fixed on the significant
challenges that lie ahead. The 2009–2010 period will
see significant progress in technology development as
plans progress for the construction of Linc Energy’s first
commercial operation.
Securing new energy sources
Australia is a nation rich in coal resources, but is relatively
poor in conventional petroleum. Much of Australia’s coal
is deep underground and stranded if conventional mining
was the sole mining solution. Linc Energy’s combined UCG
and GTL technologies provide a solution for securing
energy within Australia’s borders, reducing the nation’s
reliance on imported oil products.
UCG and GTL technologies have the ability to unlock
stranded energy in other coal rich nations around the world
and can provide such countries with greater energy security
and alternate supplies of high quality, cleaner burning liquid
transport fuels.
The technology
Gas to Liquids
Final construction activities on the GTL pilot plant were
completed in August 2008 and the world’s first UCG to
GTL demonstration facility was ready for commissioning.
Linc Energy’s operations and engineering teams put the
initial design to the test. Part of the challenge to develop
new technologies, and/or combine existing, proven
technologies is to ensure that the appropriate skills
and experience are in place and that these are effective
to overcome challenges. Long hours and hard work paid
off in October 2008 when syngas was first introduced
into the Fischer-Tropsch reactor, achieving conversion
to liquid hydrocarbons.
Following this initial success, a number of start-up
modifications were identified and implemented throughout
the remainder of 2008. During this period, Linc Energy’s
GTL technology team grew in numbers and competence
with the appointment of key, highly skilled engineers
with backgrounds in gas clean-up, Fischer-Tropsch
and refining technologies and with expertise in commercial
and pilot plant operation, plant design, engineering
and project management.
By following a systematic approach to troubleshooting,
stable and reliable operation of the synthesis gas cleaning
and compression systems was achieved. This enabled
the team to focus on comparing actual plant performance
against design values, evaluate optimisation opportunities
in contaminant removal and to gather important information
during sustained periods of UCG to GTL operation to fully
understand the integration of the two technologies. During the
first two quarters of 2009, four Fischer-Tropsch campaigns
were conducted. Each campaign brought incremental
improvement and learning. Linc Energy’s research laboratory
contributed significantly to campaign success by operating
a small scale Fischer-Tropsch reactor while simultaneously
operating the main reactor of the pilot plant on identical UCG
syngas. The laboratory reactor was able to demonstrate high
carbon monoxide and hydrogen conversions over extended
periods using gas taken from the plant. This provided not
only valuable data but also significant confidence that further
process improvement could be achieved.
These achievements, coupled with advances in gas cleanup
through continuous liaison with catalyst and chemical
suppliers, enabled the GTL team to produce even higher
quality syngas with contaminants in the parts per billion
(ppb) range. The subsequent improved performance of
the Fischer-Tropsch reaction section resulted in the production
of appreciable quantities of high quality syncrude during
these campaigns.
The next stage of improvement work will focus on increasing
catalyst activity, and subsequently, production rates. Work to
further improve the Fischer-Tropsch catalyst reduction system
is well under way and a program of Fischer-Tropsch catalyst
options and performance testing (both in-house and external)
is being expanded. Refinements and improvements in the UCG
process, as a result of integrated pilot plant campaigns, have
been implemented in the next generation pilot gasifier, which
is nearing design completion.
The results from the pilot work have and will continue to be
used as key inputs during conceptual engineering of the
commercial scale UCG to GTL facility. Since the beginning
of 2009, the GTL technology team has been working on the
scope for the conceptual project and compiling the design
basis for Linc Energy’s 20,000 barrel per day commercial
UCG to GTL facility planned for South Australia. The team has
also evaluated key Australian-based engineering companies
to assist in Linc Energy’s GTL technology development.
A technology partner selection process resulted in Linc Energy
partnering with Aker Solutions to complete the conceptual
design package by the end of the first quarter of 2010.
Underground Coal Gasification
Linc Energy made a significant investment during the year to
further develop its UCG technology platform. The investment,
largely in the form of a greatly expanded technology team,
resulted in the acceleration of Linc Energy’s UCG technology
development. This will further drive Linc Energy towards
commercialisation as its technologies reach maturity.
The UCG technology platform being developed is multidisciplinary.
It links generator cavity growth modelling with
gasification modelling and engineering, which in turn is
linked with geological and hydrogeology understanding and
modelling. The technology will allow Linc Energy to predict
the volume, quality and cost of synthesis gas (and contained
energy) produced from coal resources as they are identified.
This platform will also be used as the basis for design,
construction and operation of commercial UCG generators.
The Linc Energy technology team is also developing the
drilling, well design and other specialist engineering aspects
of the technology to confirm cost and reliability objectives
for commercial scale operations.
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