MEDIA RELEASE
July 2006
Media Release
BP AUSTRALIA EXTENDS AGREEMENT TO BE LINC ENERGY'S FIRST MAJOR CUSTOMER FOR ULTRA-CLEAN DIESEL AND AVIATION FUEL
Recently-listed Linc Energy Ltd (ASX:Code LNC) has extended its Memorandum of Understanding with BP Australia Pty Ltd to be the first customer to purchase up to 14,000 barrels a day ultra-clean diesel plant to be produced at Linc's production plant to be commissioned at Chinchilla in Queensland.
BP's Memorandum of Understanding with Linc Energy involves the oil giant purchasing up to 70 per cent of the 20,000 barrels or diesel and other 'clean' fuels to be produced at the plant.
The take-up of production, based on the current price of sulphur-free diesel at over $US90 a barrel, could mean a revenue stream to Linc Energy of above $588 million a year.
Chief Executive of Linc Energy, Mr Peter Bond, said "We are delighted to have attracted one of the world's largest fuel companies to participate in an MOU to potentially purchase the ultra-clean diesel we will produce at our Chinchilla plant."
"Linc Energy is well on the way to becoming a significant player in the world's clean diesel and aviation fuel market", he added.
The Chinchilla plant will produce sulphur-free diesel through two proven processes - Underground Coal Gasification (UCG) and Coal To Liquids (CTL). When the two processes are combined, the projected production target of a planned full-scale Chinchilla plant is projected to be about 486 million barrels of diesel over its life.
The UCG process is used to turn the coal reserves into energy by 'gasifying' the coal underground. The resulting gas, called Syngas, will be used as feedstock for the CTL plant. The Syngas will be used to produce liquid fuels, such as diesel and aviation fuel, as well as generate electricity.
Linc Energy, which has been at the forefront of the UCG process's development over the last six years, expects to commission its $6 million demonstration plant in May 2007, with the construction of the full-scale diesel plant planned to follow soon after.
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