This MOU further extends the relationship developed between the management of both companies over the past 10 years. Detailed licence agreements are expected to be completed in the coming weeks.

Dr. Len Walker of Cougar and Dr. Michael Blinderman of Ergo Exergy were together responsible for the conception, development and operation of the successful Chinchilla test burn which gasified 35,000 tonnes of coal between 1999 and 2002. Ergo Exergy had provided the initial UCG technology to Linc Energy, which owns the Chinchilla project. (Earlier post, earlier post.)

The UCG process enables deep coal deposits to be converted into a syngas suitable for use as a fuel in power generation or the manufacture of a range of synthetic petroleum fuels and chemicals.

As well as the past Chinchilla trial, Ergo Exergy is currently providing UCG technology to the public utility company Eskom in South Africa, which operates about 40,000MW of installed capacity. The selected coal seam at Eskom’s Majuba coal field was ignited on 20 January 2007, and the Company’s long term plan is to generate 2,100MW using UCG gas as the fuel for a combined cycle gas turbine plant.

In relation to Cougar’s Kingaroy project in Queensland, Dr Walker said that drilling was due to start on 12 November, in a program which will culminate in the installation of the first three process wells in the first quarter of 2008. Cougar has already established that an area of at least 2.5 km² exists within the project area containing a coal seam with a minimum 11.8m thickness at a depth of at least 157m.

The Cougar companies are also currently planning further projects in Queensland, Victoria and Pakistan, and are in negotiation in relation to several other potential UCG development opportunities.