Wyoming UCG project headway boosts Linc Energy shares

LINC Energy's shares rose as much as 4.5 cents, or nearly 4 per cent, to S$1.20 on Thursday after the energy exploration company said its underground coal gasification (UCG) project in the US state of Wyoming has made further headway, as it received approval from regulators for a research and development (R&D) licence - a major milestone for the firm.

The stock closed trading at S$1.185, up three cents.

The approval by the Wyoming Department of Environment Quality (WDEQ) is a first for a UCG project in the US in 20 years, it said.

UCG involves burning coal while it is still in the seam, and capturing the gas, known as synthetic gas. This can be used in power generation or as a feedstock in liquid fuels, fertilisers or chemical products. The technology is used to extract coal resources considered too deep or low-quality for conventional mining.

Linc Energy, a big proponent of UCG as the next clean-energy platform, controls about 74,550 hectares of coal in Wyoming's Powder River Basin. A part of this is situated near its oil and gas operations in Wyoming, and the firm plans to use the carbon dioxide produced from its UCG operations for enhanced oil recovery projects.

Linc said it has had to jump through multiple hoops to get to this stage.

On Monday, the US Environmental Protection Agency (EPA) approved the firm's aquifer exemption request, fulfilling the final regulatory requirement in the "extensive licence application process" which included numerous public feedback sessions, an administrative hearing, and technical and regulatory reviews.

Before these, the Wyoming Environmental Quality Council (EQC), an independent citizen council appointed by the governor, also cast its vote of approval.

Peter Bond, Linc Energy's chief executive, said the R&D licence granted to Linc validates its commitment and ability to "responsibly deploy" UCG technology, while meeting and exceeding requirements of "some of the world's most stringent regulatory agencies". "This approval, after a lengthy review by the WDEQ, EQC and EPA, demonstrates the technical capability and knowhow that Linc Energy has in developing UCG as a new-generation energy process," he added.

The firm has been accused by the Queensland government of causing environmental damage with its UCG R&D facility in the town of Chinchilla in the Australian state. Linc, however, has rebutted that the state government has been unwilling to learn about UCG and that the allegations reflect a widespread belief that it has been running an agenda against the UCG industry.

Linc Energy also has UCG projects in Poland and South Africa. It already owns and operates a commercial UCG operation in Uzbekistan, which supplies synthetic gas to a nearby power station.

Linc Energy's shares have seen active trading in the past two weeks, after it agreed to sell its mine royalty for the Carmichael coal mine in Queensland, Australia, to the Adani Group for A$155 million (S$179.5 million).

It also said on Sept 3 that it had received unsolicited offers for its oil and gas assets in the US, its main revenue drivers. It is in the process of working with these parties to see if an agreement can be reached.