CORPORATE SERIES

UCG SERIES

GTL SERIES

ENVIRONMENT SERIES

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Syngas in the Modern Energy Mix04 UCG Series

Syngas properties and usesSynthesis gas (syngas) is the product of UCG and a very versatile energy product. It is well suited as the feedstock for a range of different products, including electricity and transport fuel. Syngas is the favoured feedstock for the major developmental clean coal technologies.

As a mix of mostly hydrogen (H2), carbon monoxide (CO), nitrogen (N2), carbon dioxide (CO2) and methane (CH4), syngas provides opportunities for its use as either a heating gas (due to the heating value of CO, H2 and CH4), or by using H2 and CO as the basic building blocks for chemical and fuel production applications.

Depending on the downstream application of the syngas, the composition can be changed by altering process conditions in the UCG operation. N2 and CO2 are the unwanted components of syngas, with the former able to be removed if oxygen is used as the oxidant.

Stripping CO2 is a commercially practiced technology, for example CO2 has to be stripped from natural gas before it is liquified in an LNG plant. Syngas production and CO2 capture are both well understood technologies. There is also the opportunity to reduce CO concentrations as part of the UCG process.The resulting CO2 can then be sequestered. This is the same principle practiced in Integrated

Gasification Combined Cycle (IGCC) power generation, where coal is gasified and ‘shifted’ aboveground to produce power with little or no carbon emissions.

UCG syngas is a very valuable and versatile product. It can be used for a wide range of downstream applications. Its composition can be tailored for the specific application and it is well suited to be part of the energy mix in a carbon constrained world. Linc Energy believes that with this value and versatility, an enormous range of opportunities for the development of new, value adding industries in coal-rich regions will emerge, with UCG at the cornerstone of such developments.

Syngas for power and fuelSyngas has a long and demonstrated history, used in both electricity generation and transport fuel production. Many Australian cities and towns were powered on ‘town gas’ for much of the last century before natural gas became available. The technologies to deliver these products are well established and have been refined and improved over decades. By using UCG-generated syngas, Linc Energy is progressing an alternate method of syngas production.UNDERGROUND

COAL GASIFICATION

AMMONIA UREARESIN

MTBE

ACETICACID

PHOSGENE

DETERGENTS PLASTICISERS

NH3

CO2

FUELS, WAXES, OTHERS

METALS

ELECTRIC POWER

POLYURETHANE

FORMALDEHYDE

METHANOL

CARBONMONOXIDE

HYDROGEN

OXO ALCOHOLS

FISCHER TROPCH

SNG

TOWN GAS

REDUCTION GAS

GAS TURBINES

This information sheet describes the potential of syngas, the product of Underground Coal Gasification (UCG), to contribute to the future energy mix in a carbon constrained world.

“Production (of oil) reaches 104 mb/d in

2030, requiring 64 mb/d of gross capacity

additions – six times the current capacity of

Saudi Arabia – to meet demand growth &

counter decline”

World Energy Outlook, 2008

Figure 1: Applications for synthesis gas

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04 UCG Series

Syngas in the Modern Energy Mix

Increasing energy demandAs world economies and developing countries continue to grow, so too do energy requirements. This is seen in the strong link between gross domestic product (GDP) growth and the crude oil price. Rapid growth of developing nations has led world energy organisations to predict world energy use will increase 44 per cent by 2030ª.

A significant proportion of energy demand is for electricity generation and liquid transport fuels necessary to sustain an acceptable standard of living.

The challenge lies in rapidly finding ways to meet the significantly increasing demand and balancing the effects of carbon emissions.

Uncertain liquid fuel supplyTraditional sources of liquid fuel supply are in decline, yet demand continues to increase. Consumption is now between four and five barrels of oil for every barrel discovered. The world’s giant oil fields are experiencing declining production, and apart from the polar regions, there are very few frontier oil prospects remaining.

Alternative fuels, or the unlikely event of several major new discoveries, are needed to fill the supply gap that will continue to grow.

Industrial oil users could replace the oil with other forms of energy. Currently there are few feasible alternative fuels used in transportation (particularly aviation) or mobile equipment.

These users account for 73 per centa of liquid fuel use in Australia. The feasibility of replacing conventional transport fuels is determined by:

• Cost

• Capability to produce large volumes quickly

• Fleet readiness (transport fleet replacement or modifications to adjust to new fuel types can take decades and come at enormous capital cost).

Given there is no imminent primary energy rival for crude oil, the future energy mix is likely to include a range of fuel sources.

19951980 2006 2015 2030

200

250Quadrillion Blu

History

Coal

Nuclear

Natural Gas

Renewables(Excluding Biofuels)

Liquids (including Biofuels

Projections

150

100

50

0

1980

1985

1990

1995

2000

2006

2010

2015

2020

2025

2030

800Quadrillion Blu

History Projections

600

400

200

0

283

308 34

8

366 39

8 472

508 55

2 596 63

7 678

1990

2000

2006

2010

2020

2030

80

100

mb/

d

120

60

40

20

0

Natural Gas LiquidsNon-Conventional OilCrude Oil - Additional EORCrude Oil - Fields yet to be foundCrude Oil - Fields yet to be developedCrude Oil - Currently producing fields

Figure 3: Global oil discovery, supply and demand trends and projections (EIA World Energy Projections)

Figure 5: Future liquids production will include a mix of alternatives and yet to be found sources - World Energy Outlook 2008

Sources: History: Energy Information Administration (EIA), International Energy Annual 2006 (June-December 2008),www.eia.doe.gov/iea. Projections: EIA, World Energy Projections Plus (2009)

Sources: History: Energy Information Administration (EIA), International Energy Annual 2006 (June-December 2008),www.eia.doe.gov/iea. Projections: EIA, World Energy Projections Plus (2009)

Figure 2: World Marketed Energy Consumption 1980-2030

Figure 4: World Marketed Energy Use by Fuel Type 1980-2030

Figure 6: Australian Liquid Fuels Breakdown by Use (ABARE 2008)

1930

1940

1950

1960

2000

1970

2010

1990

1980

2020

2030

2040

2050

60Discoveries

Peak Discovery

Cru

de

oil/N

GL,

gig

a-b

arre

ls/y

ear

SupplyGap

Peak Oil

Discovery Projection

Consumption

Demand Projection

Supply Projection

45

30

15

0

Other 12%

Agriculture 4%

Mining 7%

Road Transport 51%

Air 10%

Manufacturing & Construction 16%

Figure 3: Global oil discovery, supply and demand trends and projections (EIA World Energy Projections)

The UCG to GTL solutionConversion of UCG syngas into Fischer-Tropsch (FT) liquid fuels brings an alternative fuel to the energy mix that addresses some of the most important requirements for alternative fuels because:

• It has superior combustion and air pollutant properties that will result in significant reductions in emissions of air pollutantsb

• The potential for sequestration of upstream greenhouse gas emissions could result in significant life cycle reductions when compared with crude oil derived fuels

• FT diesel can be used in existing diesel engines, negating the need for large scale fleet modification or replacement

• Jet fuel can also be produced for use in commercial passenger airlines, without the need for engine modification

• With coal as the primary resource, a long term supply can be assured.

Electricity supplyThe key challenge for Australian electricity supply is to meet growing demand with ageing infrastructure and within the constraints of a carbon emissions cap. Current projections for Queensland indicate that additional generation will be required in the longer term, subject to the timing of expected new load growth.

The UCG solutionThe commercial history of UCG to date has been the production of gas for electricity generation. Linc Energy’s Yerostigaz facility has supplied commercial syngas electricity generation for 50 years.

10,000

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

2018/19

10,500

11,500

12,500

13,500

14,500

11,000

13,000

14,000

15,000

Allocated Installed Capacty

MT P,A,S,A Avaliable Capacity

Additional Capacity Required

Capacity for Reliability

12,000

Cap

acity

(MW

)

0

20

60

160

40

180

E�ectively carbon free

including cost of removing or o�-setting >90% of carbon

Tota

l cos

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ener

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n (£

/MW

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2008-09 Price of bulk power, £45/MWh

2008/09 Price of bulk power with

reward for 90% CCS, £65/MWh

80

O�s

hore

Win

d

Exis

ting

Coa

l

New

USC

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T (N

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CCG

T (U

CG G

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New

Nuc

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(Bas

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175

46

7181 79

70

47

“Rapid development and deployment of Underground Coal Gasification (UCG) to reduce carbon emissions and electricity prices.”

Recommendation of the US Clean Air Task Force for Federal Policy addressing climate change, September 2009.

Figure 7: Queensland Summer Supply-Demand Outlookd

Figure 8: Costs of Low-carbon power generatione

“Australia is coal and gas rich, with hundreds of years of reserves. Technologies that convert

coal and gas to ultra-clean diesel and jet fuel have the potential to replace Australia’s

declining oil reserves and make us self-sufficient in liquid transport fuels once again.”

The Hon Martin Ferguson AM MP, Australian Federal Minister for Resources and Energy,

Linc Energy Chinchilla Demonstration Plant Opening, 22 April 2009.

LINC-UCG-04.2

www.lincenergy.comlinc@lincenergy.com

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32 Edward Street GPO Box 1315 Brisbane QLD 4001 AUSTRALIA

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Important disclaimer: Information contained in this information sheet is provided for information only and Linc Energy makes no warranties as to its accuracy and completeness. Use of information contained in this information sheet is at the sole risk of the user. Linc Energy has made reasonable efforts to ensure that information in this information sheet is accurate at the time of its compilation, however there may be inadvertent errors or omissions for which Linc Energy apologises. To the extent permitted by law, Linc Energy accepts no responsibility for any loss, damage, cost or expense whatsoever incurred by any person as a result of any use of or error or omission in or relating to, the information contained in this information sheet.

04 UCG Series

Syngas in the Modern Energy Mix

0

1000

2000

3000

4000

5000

6000

Equi

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• Existing UCG technologies are ready for quick commercialisation

• A 21 per cent reduction in greenhouse gas emissions can be achieved (relative to current coal-fired power stations). This is due to the mining savings and enhanced thermal capacity of gas fired generation over solid fuel generation

• Syngas can be ‘shifted’ to produce a hydrogen rich gas (with potential for CO

2 sequestration), which can offer the

option for a very low carbon emitting generation source

• The technology can include carbon capture as necessary

• The use of stranded coal has the potential to provide long term energy supplies.

Where to from here?On a global scale, coal will continue to be a major component of energy supply and power generation well into the foreseeable future due to its abundance, low cost and current usage. Cleaner and smarter methods of harnessing its energy are essential. The future of coal is in more energy efficient and cleaner coal technologies. UCG provides a route to achieve this, reducing greenhouse gas emissions and providing ease of integration with IGCC, carbon capture, and sequestration technologies.

UCG to GTL technologies can provide a clean, plentiful and fleet ready fuel.

Linc Energy’s combined UCG to GTL technologies are well placed to contribute to Australia’s energy security by providing a low cost, plentiful supply of ultra-clean liquid fuels.

Related information sheetsOverview of Underground Coal Gasification

Overview of Gas to Liquids

UCG and Greenhouse Gas Emissions

UCG and Groundwater

Related information sheetsUCG Explained

Gas to Liquids Explained

UCG, GTL and the Environment

About Linc Energy

Linc Energy is a globally focused, diversified energy company with a strong portfolio of coal, oil and gas deposits. Linc Energy’s purpose is to unlock the value of its resources to produce energy to fuel the future. A public company, Linc Energy is the global leader in UCG, delivering synthesis gas for commercially viable energy solutions (electricity, transport fuels and oil production), via gas turbine combined cycle power generation, Gas to Liquids processing and Enhanced Oil Recovery.

0

500,000

NG (Proved)

Oil (Proved)

CSM (2P)

CSM (Inferred)

UCG (Available)

UCG (Est Additional)Coal

1,500,000

2,500,000

1,000,000

980

1,51

6

15,1

20

446,

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1,09

6,53

8

1,33

3,90

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1,99

3,45

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$m

2,000,000

Energy independence

a ABARE, 2010, Energy in Australia.

b Energy Information Administration, 2009, International Energy Outlook.

c See Linc Energy Information Sheet GTL No 2 titled, GTL Explained.

d National Electricity Market Management Company, 2008.

e Review of the feasibility of Underground Coal Gasification in the UK, DTI Cleaner Fossil Fuels Programme, October 2004, (DTI/Pub URN/04/164c).

f PriceWaterhouseCoopers, 2008, Industry Review of Underground Coal Gasification.

Estimated Queensland Relative Resource ValuesfSource: BP Statistical Review of World Energy 2006 *Excludes Canadian tar sands

Figure 10: Estimated Queensland relative resource valuesFigure 9: Coal and/or natural gas can provide domestic energy security