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Regal Resources Signs Farm-in Agreement to Advance Commercialization of Underground Coal to Liquids Process

Regal Resources Limited, an Australia-based developer of an Underground Coal to Liquids (UCTL) process to convert low rank brown/coal lignite into hydrocarbon and gas products (earlier post), has signed a Farm-In Agreement with Greenpower Energy Limited through its wholly owned subsidiary MOL Gippsland Pty Ltd (MOL). The objective of the farm-in is to establish the existence of a reserve of coal/carbonaceous material sufficient to support commercial operation of the UCTL process.

UCTL Process Plant. WSSP = Water With Simulated Supercritical Properties (water with high kinetic energy delivered using a jet pump and purpose-designed nozzle). Click to enlarge.

Regal recently received approval from the Victorian Department of Primary Industries (DPI) and the Victorian Environment Protection Authority to conduct a pilot test to prove the UCTL process which will commence in Q1 2010. UCTL is an in situ process; each component of the process has been demonstrated in the laboratory, but there has yet to be a field test.

The key terms of the farm-in Agreement are:

  • Regal has the right to earn a 70% interest in the Exploration Licence through the funding of the Agreed Work Plan, estimated to be approximately A$1.5 million.

  • The earn-in commences upon the successful renewal of Exploration Licence 4860, with Greenpower and MOL working together to secure the licence renewal and determine the Agreed Work Plan.

  • MOL will receive a 10% royalty and $1 million repayment of their technical expenditure out of expected future production flows from the tenement.

  • MOL to fund the Rehabilitation Bond with the DPI.

  • MOL to pay Greenpower an amount of the first year’s work plan expenditure (to be held in trust) to be offset as work is performed.

MOL has conditionally agreed to assign half of its interest to a third party which is in the process of acquiring rights to technology that has the potential to convert lignite to methane “in-situ”. It is proposed such technology would be made available via sub-license to the joint venture.


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