Liberty Resources Planning New Coal Gasification Facility

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Researched by Industrial Info Resources Australia (Perth, Australia)--Liberty Resources Limited (ASX:LBY) (Perth, Australia) is planning to build a coal gasification facility in Queensland, Australia, which the company claims will be capable of producing some of the cheapest synthetic natural gas in the world.

The long-term objective of the West Australian-based company is actually the production of low-cost urea fertilizer. To produce urea fertilizer, deep coal seams are processed in-situ through a process called "underground coal gasification," whereby water is injected into the well, where it reacts with the coal to produce hydrogen, carbon monoxide and methane. This synthetic natural gas is then processed at the surface to produce a variety of products, including fuels and fertilizers.

In order to help fund the future development costs of its urea fertilizer plant, Liberty Resources is pushing ahead with a coal gasification facility that will supply "pipeline grade" synthetic natural gas to the domestic market. Upon completion of the fertilizer plant, Liberty will stop supplying the synthetic natural gas to customers and will instead pipe the gas to the fertilizer plant, where it will be processed into urea fertiliser and ammonia.

In a recent interview, Liberty Managing Director Andrew Haythorpe said: "What we're doing is crossing boundaries, picking out the best technology and putting it together. By doing that, we combine the deep coal in Queensland with some substantial benefits. We think we've got the next evolution of unconventional gas production that moves beyond coal-seam gas."

At this stage, Liberty has yet to commit to a location for the proposed plant, but prefers a site near Injune in Denison, Queensland. Another option for the plant is Victus, near Miles, Queensland. Both sites are close to rail, road and pipeline infrastructure in largely undeveloped areas.

The company is seeking financial backing for the project and is hoping to make its final investment decision mid-2014. Should the project get the go-ahead, Liberty is hoping to have the first gas produced in early 2018. According to Liberty Resources Managing Director Andrew Haythorpe, the company stands to make a 22% return on the $1.54-billion (AU$1.5 billion) gas plant, based on current gas prices of around $8.19 (AU$8) per gigajoule, increasing to about $12.20 (AU$12) per gigajoule by 2020.

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