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UREA PRICE
(As at 2nd November, 2012)
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(USD per metric tonne)

$419.00
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Initial Advice Statement
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October 29
BRR Webcast - Liberty Resources Letter Of Intent

October 26
September Quarterly Report

Questions and Answers

 

Q: How will you sell the urea fertiliser?

A: The urea will be sold by using an "off-take" agreement. An off-take agreement is a contract between parties to supply and buy a commodity. To support securing the project finance Liberty (Urea Corp) has offered conditional off-take contracts to major producers and distributors as well as customers of urea fertiliser.

Once the off-take agreement is finalised, it represents an important step in moving the project towards government approvals, project finance and project construction and commissioning.

 

Q: Who have you offered the "off-take" to?

A: Urea Corp has entered into numerous confidentiality agreements with international corporations who represent a "who’s who" of the fertiliser industry. Each one of these corporations has the financial might and credit to purchase the fertiliser produced by the project.

Liberty has conducted negotiations with these companies for the purposes of executing a conditional fertiliser off-take agreement. These negotiations are ongoing.

 

Q: You mention a conditional off-take? Is it usual it has conditions?

A: Yes, it’s usual at this stage to have conditions. As you know the project is not producing fertiliser just yet and because of this the off-take agreement will be subject to conditions precedent including;

  • Government approvals
  • Project finance
  • Project financier consent

This is quite normal at this stage of a project as the off-take agreement becomes more and more unconditional as the project moves towards production.

 

Q: When do you think you will know about signing the off-take?

A: Liberty does not know exactly when it will conclude signing a conditional off-take agreement; other than to say that it is currently in discussions and negotiations.

This is an exciting and important part of the project development – and the market will need be kept informed (through Liberty ASX Announcements).

Given the importance of this issue, any off-take agreement will be announced immediately after they have been finalised.

 

Q: How does Liberty plan to successfully export urea fertiliser?

A: Liberty plans to export to global markets by signing with an off-take partner. The off-take partner is responsible for the sale and distribution of the urea fertiliser once Liberty delivers the specified product to the ship at the Port of Gladstone.

This means Liberty can focus on the job of producing urea fertiliser without too much regard to managing the details and mechanics of selling to the export markets.

 

Q: Can Liberty sell its product in Australia?

A: It is planned that a part of the urea fertiliser produced will be sold into the Australian marketplace. So yes, at this stage Liberty can sell directly to the Australian farmer.

 

Q: If you get an off-take agreement, how does that work?

A: It works in that we agree to provide an amount of the urea and ammonia we manufacture to a specific point (in our case the Port of Gladstone) at a specific time and at an agreed price. It is an important part of the puzzle – having a purchaser established support the business case of the project and is a step in financing process.

We are currently negotiating with potential "off-take" partners capable of buying and distributing our products.

 

Q: How do costs of producing urea made from underground coal gasification (UCG) syngas compare with other urea production costs?

A: Our estimate for the cost of urea fertiliser produced by Liberty (from UCG syngas) is about $64/t (at the site). To give you some idea of how this compares to other urea fertiliser, in 2009, the world average cost of production was about $173/t.* So, we can say that the cost of producing urea fertiliser by using syngas is significantly lower at this time (July 2011). (*Integer Research Limited UK 2011 Nitrogen Report)

 

Q: Your production cost look too good? Are you sure you can achieve this low cost?

A: We are as sure as we can be at this stage in the project. Remember that the reason our production costs are lower is because we think the cost of our energy feedstock in syngas made by underground coal gasification is going to be so much lower. This low cost feed stock means we can make low cost urea fertiliser.

 

Q: Can the Liberty project use natural gas to make urea fertiliser?

A: Less preferred, but technically feasible, we could proceed with natural gas as a feedstock alternative. Natural gas is one of the normal ways urea fertiliser is produced. However, the significant cost benefits of urea made with UCG clearly represent the greatest benefits to stakeholders, the community and State and Commonwealth Government.

Low production costs are achieved using an integrated process which has the addition benefits of avoiding the environmental impacts of mining, processing and handling coal.

So even though Liberty could use natural gas to make urea fertiliser, it would continue to seek authority to use UCG owing to the cost advantages, the project advantages and the risk of shortages and high prices arising from LNG export demand.

 

Q: How do we generate electrical power?

A: Electricity for the entire Project is produced by using part of the syngas produced to fuel a combined cycle 205 MW power plant.

The ammonia and urea facilities consume the largest proportion of the power produced, being closely followed by the needs of the air separation unit.

The great thing is that whilst electricity production is aimed at supplying the power requirements of the Project, any excess capacity represents a possible opportunity for secondary revenue streams by selling it back into the grid.

 

Q: How do our power generation costs compare?

A: They compare very favourably because we estimate that the costs of the syngas feedstock used to fuel the power plant is low.

 

Q: How has Liberty arrived at the "Capex" and "Opex" estimations?

A: Our capital expenditures and operating expenditure costs are estimates based on what we believe are reasonable grounds. We have used all available information, costs and relevant data to support the calculations made, including actual historical cost data where available.

When possible, we have engaged independent experts to review and validate our data and calculations before we published these numbers.

 

Q: Does Liberty have any Institutional shareholders?

A: Yes, a company called Dundee Corporation, a Toronto based Investment manager.

"Dundee Corporation is an asset management company dedicated to private wealth management, real estate and resources that, combined, reflect approximately $65 billion under management and administration."

(Reference www.dundeecorp.com July 2011)

Liberty is very pleased to have an investor of the quality of Dundee as an interested shareholder in our business.

 

Q: Who are the other major shareholders in Liberty?

A: Liberty management is also a major shareholder, with the CEO substantially invested in the company. This is a great thing when the management of a business are also the owners – making sure that they put their "money where their mouth is".

 

Q: Do you have any international shareholders in Liberty?

A: Liberty is fortunate to have interest in our business from shareholders based in Europe (you can trade shares through the Frankfurt Exchange) and also investors from Canada and North America (you can trade shares on OTCQX).

As at August, 2011, Liberty has about 10% of its shareholders outside AustraliA: This is a great thing and very exciting when Liberty has investors internationally interested (and invested) in the company and its projects.

 

Q: How do you buy shares in Liberty?

A: Liberty shares are publically traded on the Australia Stock Exchange. Also, if you are not able to access the Australian market directly, Liberty is listed in the United States on the OTCQX market and can be traded through the Frankfurt Stock Exchange.

See the Liberty website for more details at www.libertyresources.com.au

 

Q: Is Liberty really committed to looking after the environment?

A: Yes, absolutely. Urea Corp is committed to establishing world best design and environmental compliance. The company aims to develop environmental standards that improve on current industry practice, founded on Australian know how and pioneered ahead of our global peers.

 

Q: I hear about this word "subsidence", what is it?

A: Subsidence means the ground subsiding or collapsing under foot. It’s talked about a lot in underground coal gasification but in reality subsidence, whilst theoretically possible, is very unlikely under our project conditions.

 

Q: How much subsidence will occur at the surface during and after UCG operations?

A: We believe, none, due to the depth we operate at. The underground coal gasification will operate at depths of approximately 1,200 metres below the surface.

Due to the mining science of rock swell factors, we believe that no subsidence will take place at the surface when the cavity made is below a certain depth.

Liberty’s operations will be conducted at depths of 1,200m, significantly below this minimum depth. Therefore, we conclude that UCG operations conducted by Liberty will not cause surface subsidence.

 

Q: Why are you so confident subsidence will not occur?

A: We are confident because of a natural occurrence called rock swell. Rock swell factors are very well documented and well understood, given the hundreds of years of experience in the underground mining industry.

Yes, a bit technical, but that is why we are confident about a low risk of subsidence.

 

Q: What is Rock Swell and Swell Factor?

A: Swelling, heaving, bulging, bulking and creeping are all terms used to describe the movement, expansion or dislocation, of a rock mass due to an increased number of fragments or fractures. This happens in underground mining, usually at depth, where new cavities are formed for ore extraction or access tunnelling, etc. These expansions can be slow or rapid and involve large volumes. Many factors affect this movement such as cavity size and orientation, geology, rock physical properties, ground, gas and water pressure, etc. At best, rock swelling may be inconvenient, at worst a severe safety risk to those working underground.

The rock swell factor is a measure of the volume that the rock will increase, or bulk, after mining or movement due to mining. The rock volume expands because the spaces between the fragments increase. This expansion, which is called the per cent swell, is measured as a percentage increase above the undisturbed in-situ volume. The swell factor is the expanded volume of the disturbed rock, less the undisturbed in-situ volume of the rock, divided by the undisturbed in-situ volume of the rock.

 

Q: How much land will be used?

A: The plant site will be approximately 1 square kilometre and have roads supporting its location. The operating UCG area is approximately 5 square kilometres, with only about 10% being used at any one time.

This is a relative small and focused footprint when you compare it to traditional mining operations.

 

Q: Where is the project located?

A: The Urea Corp Fertiliser Project is located on what is called a mineral development license (MDL446) in central Queensland approximately 450 kilometres North West of Toowoomba and 350 kilometres south west of Gladstone.

 

Q: What is the closest town?

A: The closest township is Injune, approximately 20 kilometres south of MDL446. Injune has a population of 326 (2006 Census).

 

Q: What happens with the gas after it comes out of the ground?

A: The well gas, it’s called Syngas, is hot and will contain the syngas, some steam, water and a small amount of ash. The free water and ash will be separated at the wellhead and sent to the water treatment facility nearby. The syngas is transmitted to the plant facility where its starts it production journey and ends up as urea fertiliser, ready for sale.

 

Q: How does UCG compare with CSG?

A: Underground Coal Gasification (UCG) and Coal Seam Gas (CSG) are two very different processes used to extract gas from coal seams.

The CSG process involves dewatering coal seams which releases the gas, primarily methane. CSG is extracted from coal by means of wells that are drilled down into and (in some cases) along the coal seams. Water that is pumped from the coal seam to stimulate gas production is either conveyed to an evaporation pond for disposal or processed for use in a variety of applications.

The UCG (Underground Coal Gasification) process involves injecting oxygen and water into the coal seam and combusting and gasifying the coal in situ.

The syngas produced by this process is of a different composition to natural gas but is well suited as a feedstock for production of hydrogen, ammonia urea and other chemicals. The UCG process extracts roughly 15 times more energy from the same coal volume than CSG.

 

Q: What are the water concerns with UCG compare with CSG?

A: The UCG process is a water user rather than a water producer. UCG also operates at depths well below that of CSG which means there are no or very limited surface water disposal problems.

In fact, the Urea Corp Fertiliser Project site will be designed to run on a zero water discharge basis. This means that there should be no requirement for the discharge of large quantities of water which are typically required by the other mining processes.

 

Q: Queensland has had lots of flooding, does this present a problem for the Urea Corp Fertiliser Project?

A: Our proposed plant has been designed to handle flooding risk and the recent floods should have a minor and limited effect. Certainly the UCG field process would not suffer the same consequences of exposure to flooding endured by the open cut mining industry has in 2010.

Obviously, any project will feel the effects of wide-spread flooding, in that this type of disaster has an impact on all people in the community generally, on supporting services and infrastructure all around – so I guess we will not be fully immune from the wrath of nature.

 

Q: How will potential water contaminants be handled?

A: Quickly and openly. Again, our project is at 1200m depth – so our risks are reduced, but in the hypothetical – we would activate the perimeter water management program. This is a perimeter of water monitoring wells that circle the UCG operation and can be used to pump, treat and re-inject water in the case of contamination.

Essentially our program is designed to remove any contamination through this water monitoring and management system.

 

Q: What are the water runoff concerns?

A: UCG, unlike normal mining, has no water run-off concerns. Since our "mining" operations are at 1200m below the ground there is no opportunity for water run-off.

This is unlike water runoff from traditional ‘open’ coal mining in that leaching from exposed coal can be seriously problematic if contaminants are desorbed from the coal and into the run-off water.

The UCG process avoids the environmental impacts arising from water runoff of physical mining, processing and handling coal.

 

Q: Does the Urea Corp Fertiliser Project make much "tailings"?

A: No real "tailings" are made from the UCG or Plant activities. Only small amounts of industrial treatment waste will be generated, most of which will be retreated in the water treatment plant for reuse in the secondary products manufacturing processes.

The remaining low volumes of "tailings" and other industrial waste will be removed by road transport and disposed of in accordance with requirements.

 

Q: How long will it take to get all of the permissions required to proceed with the project?

A: That’s difficult to answer, but typically, for a project of this size and complexity, it could take 2-4 years to get the approvals required.

 

Q: Is the community you will operate in a mining friendly jurisdiction?

A: We hope the community will be highly supportive of our Project. As you know, Queensland in general is a "mining friendly" state and given the low impact specifics of the Urea Corp Fertiliser Project we think that our more local community will be friendly too.

This Project will need to ensure community participation in the decisions that may have an effect on them. We aim to ensure that we have as much support as the local community is willing to give us.

 

Q: Will you be mining and operating in the community or town?

A: No. We won't be operating within any residential or township communities. The Urea Corp Fertiliser Project is located on low value State Forest which is currently leased for tree logging.

No homes or communities are situated close to our project.

 

Q: Will the "man-made" state forest be damaged?

A: The Urea Corp Fertiliser Project will have some impact on the man created forest area because we need to build a plant and the supporting infrastructure.

Our UCG "mining" process however will leave the state forestry logging and the existing gas operations largely undisturbed.

We will obviously have a co-operation agreement with any logging activities current at the time and manage this process accordingly.

 

Q: What is the closest town to the Project?

A: The closest geographic township to the project site is called Injune.

Injune is approximately 20 kilometres south of the Project and has a population of approximately 326 (2006 Census).

It is expected the socio economic impacts of the Project will produce overall positive outcomes for the local region and the State including:

  • Increased employment;
  • Increased facilities for the community
  • Increased opportunities for existing retailers and businesses;
  • Increased population; and
  • Increased schooling numbers.

 

Q: I understand impact on the water table presents an obstacle to government approval. Can you comment on this and what it is about the Urea Corp Fertiliser Project that will allow you to proceed?

A: This Project uniquely targets coal at depths of 1,200 metres below surface. At such depths coal processing is physically separated from the sub-surface water table by more than 1000m of rock thus, contamination is geologically near impossible.

Even so, the project is planning to invest millions in water monitoring and water management, including a sophisticated system of wells that can bring effected water to the surface and treat it through our on-site water treatment plant.

 

Q: We heard that another UCG company, Cougar Energy, had some real water issues on their UCG site? Do you know what happened?

A: At the time it was reported in the media that monitoring undertaken by the Cougar Energy pilot UCG project indicated higher than acceptable levels of benzene and toluene in proximate bore water.

We really don’t know exactly what happened, but our understanding was that these results were a mistake.

The laboratory that undertook the analysis has subsequently admitted it was in error and has provided both the company and the Department of Environment & Resource Management (DERM) with written confirmation that this test result was invalid.

However the Department has stopped this "pilot" operation at this time.

 

Q: Will you be really looking to protect the water supply?

A: Yes, we definitely will be looking after the water supply.

Urea Corp will, as a core part of its operation, will apply an extensive "hydro-geology" program that monitors and maintain the integrity of the water aquifers.

Also, it important to note that this project will be governed by a very strict and detail set of environmental rules – government set and applied – so this project will be watched to make sure it does not break any of these rules.

That said, you should note that this Project uniquely targets coal at depths of 1,200 metres below surface. At such depths coal processing is physically separated from the sub-surface water table by more than 1000m of rock thus, contamination is geologically near impossible.

 

Q: Why are you currently looking for assets outside Australia?

A: Liberty is looking to maximise its investment opportunities and minimise investment risks by considering non-Australian projects. Any future projects or assets would be assessed on their merit and evaluated for suitability, risk and the many other factors.

 

Q: Can you build a twin pipeline in Queensland?

A: Yes, we believe we can. Queensland has thousands of kilometres of pipeline, carrying gas from the gas fields to the customers. Our proposed pipeline is no different to these.

We want to construct a twin 350mm pipeline connecting the plant in the Denison (near the town of Injune) to the urea facility at the Port.

The pipeline is proposed to run on already gazetted, existing pipeline easements which, luckily for us, start at our plant site and terminate at the Port of Gladstone.

We hope this ensures minimal impacts and assists with the approval process.

Q: What happens if you fail to get the pipeline approved?

A: As a contingency, the Urea Corp Fertiliser Project will use rail to transport the product. In this event, a rail spur line will be constructed from the Project to the existing rail link at Roma, allowing transfer directly to the Port of Brisbane the Port of Gladstone via the proposed new Surat rail link.

 

Q: How much will the Urea Corp Fertiliser Project cost?

A: Roughly, 3 billion dollars.

The costs of the project can be broken down to the following;

EST. ONLY

Costs USD2012 m

Cost

Sub-Totals

Cost Total

UCG Field

UCG Field Wells

75

UCG Field Surface Facilities

30

105

Gas Cleanup

Gas Cleanup Plant

199

199

Urea Plant

Ammonia Synthesis Plant

959

Urea Synthesis Plant

262

1221

Infrastructure

Water Treatment Plant

29

Power Generation Plant

388

Air Separation Unit

214

631

Total

2156m

Options

Pipeline Option

440

2596m

Ref: Lockdown Model August 2011 (excludes contingency + 15%)

Q: Wow, that sounds like a lot of money?

A: Yes, it is, but a couple of things should be noted;

Firstly, this is what it costs to build a urea fertiliser plant – and whilst it is a lot of money – if you want urea you have to be ready to spend this sort of money.

Secondly, whilst you and I might think it is a lot – the people in this business understand what you have to invest – so it is not that shocking to them!

 

Q: Will the Project make enough money to justify such a large investment?

A: Yes, we think so. Ultimately however, the investment decision on the Project will be made based on the best possible calculation of this answer – done when the BFS (bankable feasibility study) is completed.

 

Q: What does this mean you think you can produce urea fertiliser for?

A: We think, based on our studies and calculations, that we can produce for $64 per tonne ex-plant direct costs.

 

Q: Will a UCG pilot project be a necessary step for obtaining a UCG project approval?

A: It is our intention NOT to do a pilot project given that 3 pilots have been conducted.

These pilots prove that UCG can be done successfully – and HAS BEEN DONE. So, we hope to avoid the costs of proving technology that is already proven.

We will be implementing a staged development of our UCG field operations, prior to the construction of the Plant, which ensures that our project is properly researched and commissioned in a step-by-step way.

 

Q: What impact will the recent problems of Cougar Energy have on getting new UCG projects approved in Queensland?

A: We trust that this is behind us and that we are looking to the balanced and independent outcomes from the scientific panel report currently being prepared for the Queensland government. This report is based on the results of all 3 pilot projects. The projects achieved some great success and should the independent scientific report to government conclude this, then it may support the approval of UCG as a viable process in Queensland.

 

Q: What are the next steps towards the approval of the Urea Corp Fertiliser Project?

A: The Project will require approval under a number (and many) legislative Acts of Government. For us, the next steps are to prepare and lodge what is called an Initial Advise Statement (IAS) and an Environmental Impact Statement (EIS).

We have been working on this approval process for some time. As at July 2011 Liberty has finalised the preparation of the IAS, ready for submission.

Once submitted the IAS will allow Government to evaluate the project and make a declaration as a "significant project". In doing so, provide us with what is called a "terms of reference" used to prepare the EIS. This does not infer Queensland government backing of the project, rather it signals that the project warrants a robust impact assessment process involving whole-of-government coordination.

 

Q: Is this the "usual" process to get approvals?

A: Yes, it is normal for almost every project of this type and size – it is no different for us than it is for the other resources companies wishing to develop a project in Queensland.

 

Q: How suitable are the left-over burn cavities for CO2 storage?

A: Every cavity and every situation is different – so the option of CO2 storage – CO2 sequestration – is not fully known at this stage.

What we do know is that our project has very deep cavities which are under extreme pressures – and given the suitability of the geology – they may be suitable for CO2 sequestration. We will need to access suitability on a case-by-case basis.

 

Q: Can the coal burn get out of control? How can you stop it?

A: No it can’t. Although it is described as ‘the burn’, we should emphasise that it only combusted because we pump the coal with a continuous stream of high-pressure oxygen – the lifeblood of any burn.

UCG is a highly controlled process. It requires many controlled actions to initiative the gasification process way underground.

For us, it is even more controlled. Operating at depths greater than 1200m the pressure is absolutely extreme. This extreme pressure renders the combustion process more manageable. Without an externally generated flow of high pressure oxygen, combustion is simply not possible.

We can "turn-it-off" because of a basic rule of physics; for things to burn, you need fuel, oxygen and a source of ignition. Since the oxygen supply to the burn cavity can be cut - any combustion will cease instantly.

 

Q: How much will utilisation of UCG change the quantity of coal reserves?

A: It is estimated that the world recoverable coal reserves would almost double utilising the UCG method.

 

Q: What will push UCG as a well-used commercial process?

A: Like most activities in life, the determining factor in deciding the commercial success of a particular activity is "Need", and an increasing need for cheap energy is considered to be the primary reason that UCG will inevitably be utilised in the near future. In addition, enabling the exploitation of an otherwise inaccessible resource and offering a wide range of product stream possibilities are also valuable benefits of the UCG process which are considered to add to its desirability.

Currently, world energy needs are supplied in the following approximate proportions: Oil – 33%, Coal – 27%, Gas – 21%, Nuclear – 6%, Renewables 13%. With oil reserves in decline, nuclear power considered to have undesirable side issues and renewables unlikely to be able to offer an alternative, or even a substantial contribution, to energy supply in the near future, there is likely to be an energy gap or a period of significantly increased energy costs, or both. Using an abundant existing energy source, such as coal, is considered inevitable.

Any process that increases the useable reserves of this commodity will be difficult to ignore. UCG is a process that achieves an increase in coal reserves in an environmentally responsible manner using existing technology and will be particularly valuable.

 

Q: Then why hasn’t UCG been commercialised before?

A: UCG hasn’t been widely developed commercially before (A commercial-size project has been operating at Angren in the former Soviet Union for more than 40 years), because of other existing readily available cheap sources of energy.

We have been very fortunate to have had available to us extensive and easily extractable reserves of coal, oil, gas and to a lesser degree nuclear power. This situation is now changing. Oil and gas, in particular have seen recent significant increases in prices, with a knock on effect into downstream products. Increases in prices, for any commodity, focuses attention on to alternatives and this is what is currently happening with UCG (also CSG, etc). Even so, many downstream UCG products are still not viable alternatives to those same products when produced from oil and gas, etc, even at current elevated price levels.

 

Q: Using UCG, how much energy does the Urea Corp coal reserve have?

A: The Urea Corp Fertiliser Project Denison coal reserves have an estimated total recoverable gas equivalent of 15,142 Peta Joules (PJ) from the inferred coal resource. This represents approximately 1.9 billion barrels of oil equivalent if the Syngas were converted to Synthetic Crude Oil.

 

Q: I would like to understand more about the underlying technology of UCG to UreA:

A: In its simplest terms, urea ((NH2) 2CO) is made by combining ammonia (NH4) and carbon dioxide (CO2). Carbon dioxide is the by-product of many industrial processes and ammonia is made by combining nitrogen (N2) extracted from the air, and methane (CH4). Natural gas is almost pure methane. Methane is also a major component in the syngas produced by the UCG process.

Urea production is a mature and well developed technology – used in hundreds of places around the world.

 

Q: Are other urea producers implementing similar UCG technologies elsewhere?

A: In terms of using UCG syngas as a feedstock for making urea – we believe LBY is the first to get to this stage of a UCG urea project.

 

Q: Is UCG possible at a depth of 1200m?

A: Yes, we believe that gasification of coal is possible at 1200m. UCG trials are currently being developed for depths up to 1400m.

Q: Typically coal seams up to a depth of 600m have been preferred for UCG. Carbon Energy’s UCG operation is at 200 m, Linc Energy’s at 125 m and Cougar Energy’s was at 130-300 m.

A: The views on preferred UCG coal seam depths have been changing over the last few years. Shallower depths were considered preferable because of lower drilling costs; however, our research indicates that the increased drilling costs associated with deep coal are well outweighed by the advantages of high operating pressures.

At 1200m we have over 100bar (that’s 100 X normal) of pressure – this allows for higher (more compressed thus more mass) flows through the wells and should provide us with a better burn.

At these depths you have the additional advantage of distance from water aquifers. The processing is physically separated from the sub-surface water table by more than 1000m of rock thus, contamination is geologically near impossible.

 

Q: Is drilling a problem at 1200m?

A: No, recent advances in directional drilling have made high precision drilling at greater depths routine. It is now possible to pinpoint a target within 10cm accuracy over a 2km distance.

 

Q: Have other operators handled or tried at these depths before?

A: Yes, an UCG plant at Thulin in Belgium operated at 860m, a current project in Alberta is operating at 1400m and the German Centre for Geoscience has proposed a 2000m depth for its up and coming UCG operation. So we are not alone on this.

Q: Our plant uses lots of oxygen; will it be possible to source ~4000t / day of oxygen?

A: External suppliers are unlikely to be able to supply. On-site we plan to build an "Air Separation Unit" (ASU) with a capacity of 4,000 tonnes per day to generate oxygen for the UCG process and nitrogen for the Ammonia Synthesis process.

This ASU operates using cryogenic distillation and the required capacity is within the typical range of current technology.

In our plant it is likely that the ASU will be integrated with the power generation plant and use its gas turbine to compress air and then to return any excess nitrogen to the gas turbine for ammonia production.

Q: What happens if you actually have too much water?

A: If a water surplus exists then there may be a possibility for the water to be sold off for irrigation purposes. Unlike the coal seam gas industry the water generated from the UCG process is brought to the surface as steam so it is effectively desalinated water. . This water, if needed, can then be processed through our on-site water treatment plant and distributed accordingly.

 

Q: Where does Liberty’s UCG experience come from?

A: Currently, Liberty has built up a team of people with a variety of experience suited for the current stage of development of the Liberty project and business.
At this time (July 2011) Liberty does not have a team of “UCG specialist” standing around - it just not the time and there would be no work for them to do!
We do access UCG service providers, such as Clean Coal Limited UK, to give us support or information as required.

 

Q: What if you ‘get it wrong’ and there is a problem that causes surface subsidence or water contamination, etc?

A: If we get is wrong - we have to fix it, we have no choice. That is why in Australia the government is so tough about these issues. Most of our approval process is around the impact and risks to the environment and how we are going to protect it - but yes, I guess it’s a possibility, however slim, that something might go wrong.
We will work to ensure that we don’t get it wrong - but if we do - it will be fixed.

 

Q: Will you live up to your responsibilities?

A: Liberty has a project with a potential resource life of as long as300 years - so as a company we are invested for a long time.
It is very important for us to live up to our obligations and promises - as we need to be in business, in this community for a long, long time.

We understand that we must be a good corporate citizen and we must be a great member of the local community - and we trust our future actions will prove this.

 

Q: Have we gasified coal? Can we gasify coal? Do we have the experience to gasify coal?

A: At this time in our project development, the actual requirement for gasifying coal is still quite a way off. In the future we will rely on the best available expertise available to support our project coal gasification requirements. UCG service providers, such as Clean Coal Limited UK, will be engaged to provide support or assistance as required.

 

Q: If you haven’t gasified any coal, how do you know it will work?

A: Underground coal gasification is not new. It is an established process based on previous history; like the Yerostigaz UCG Field in Uzbekhistan, which has been operating for over 45 years and produces 250,000 cubic meters of syngas per day for use in the adjacent Angren Power Station. So proof exists showing that gasifying coal underground works.
More excitingly is the Australian underground coal gasification being done by Linc Energy and Carbon Energy in that they continue to prove the commercial viability of the longwall CRIP method of UCG. This is real Australian innovation and know-how.
Whilst it would be wrong to claim that UCG is a wide-spread technology on a par, say with the extraction of traditional oil and gas, it is not a brand new and unproven technology.

 

Q: If it’s so good why isn’t it being done on worldwide scale already?

A: The reason why UCG is not being done on a world wide scale is that for most of the last century energy economics has been dominated by cheap oil and even cheaper natural gas. It is now believed that this era is drawing to a close.

In 2009 the US Energy Information Administration predicted a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called "unconventional fuels" -- oil sands, ultra-deep oil, shale oil, and biofuels.

Whilst we don’t know what the energy economics of the future will be - a focus on more efficient and environmentally friendly energy production is more certain. In such UCG fits this bill.

 

Q: How do we ignite the coal underground?

A: There are a variety of different methods all of which use an “ignition mechanism” that is inserted into the coal via the ignition drill hole.

 

Q: What is the volumetric capacity for potential storage of CO2 in the cavity?
A: The volumetric capacity of our cavity is approximately 500 000 cubic metres. The cavity size is 600m X 30m X 30m - approximately.

 

Q: What is Liberty’s policy toward Safety?

A: Liberty is committed to strict safety standards across all parts of our business operations.

 

Q: What is Liberty’s policy toward security risk substances such as ammonium nitrate?

A: Yes, ammonium nitrate is defined as a security risk substance.

Liberty aims to meet all the requirements of managing a security risk substance; including administering the control in compliance with the Explosives Act, performing stringent employee and contractor checks before work can commence at our facility and only selling to licensed approved customers.

 

Q: How large a role does urea play in world agriculture?

A: Urea is the world’s most popular fertilizer, providing nutrient to crops helping them grow and be productive for healthy food production.

Urea is a key fertiliser providing nitrogen to these crops. It is vital to global food production and becoming more important as the worlds’ demands increase.

 

Q: Queensland has an upcoming state election this year; in your view are there any specific risks posed from a future government?
A: Yes, risks in government are a normal part of doing business - but we do not believe that the upcoming state election poses any special or greater risks for us.
Liberty has always been proactive and has approached key people, both at State and Commonwealth levels, to talk about the direct sovereign benefits of the Urea Corp Fertiliser Project.
We believe with the estimated $3Billion investment in the state’s economy, our high levels of environmental compliance and the demand for the end product (urea fertiliser); we are in excellent shape to win the governments (both state and federal) support for our project.

 

Q: Making fertiliser this way will be pretty unique, is the government aware this could be a new industry for it?

A: The Urea Corp Fertiliser Project has the potential to establish Queensland as a leader in a new industry. Without the adoption of underground coal gasification as a means of generating energy and Syngas, the opportunity for Australia to pioneer a new export industry by upgrading coal into a valuable end product utilising vast, previously inaccessible natural resources, will remain unrealised.

 

Q: What is the market for urea fertiliser like?

A: Current predictions show that the growth in global consumption of urea may continue with solid and stable demand; but remember global markets can change up and down without notice - so it is hard to really say for sure.

 

Q: When did the Queensland Government release its policy on UCG?

A: In February 2009 the Queensland Government released its policy on Underground Coal Gasification (UCG).

 

Q: What were the basics of the February 2009 policy?

A: The Policy provides for a UCG Pilot Phase to gather the information necessary to assess the future viability of a UCG industry in the State.  In particular, the Policy makes provision for three UCG Pilot Projects to demonstrate the technical, environmental and commercial viability of the UCG technology. The pilot trial period is coming to an end in 2011 with a report due from the scientific panel in 2012.

 

Q: There has been much discussion about petroleum tenure and mineral rights (UCG) - how was this handled in the pilot stage by the government?

A: For each of the mining tenures granted to the UCG pilot projects, notwithstanding that petroleum tenure may overlap part or all of this tenure, it was decided that all other rights under that petroleum tenure shall continue and only coal seam gas extraction is affected.
The government feels that this approach satisfies both the UCG pilot rights and the petroleum rights, thus allowing the UCG pilot project to be developed while minimizing the impact on the petroleum industry.

 

Q: Who is doing the UCG pilot projects?

A: Currently 3 companies have invested in these pilot projects, they are;
Linc Energy (MDL 309);
Carbon Energy (MDL 374);
and Cougar Energy (MDLA 385).

 

Q: Who is responsible for monitoring these pilot projects?
A: It is the responsibility of DEEDI, the Department of Employment, Economic Development and Innovation, to monitor and report on the pilot projects.

 

Q: Can there be more pilot projects?
A: Yes, it is possible because the Minister for Natural Resources, Mines and Energy has the absolute discretion to approve further UCG projects. The likelihood of further approvals however is not guarantees as during the pilot project phase there will be no further UCG pilot projects on public interest grounds.

 

Q: What happens at the end of the pilot projects?

A: A scientific panel, appointed by the government, will prepare an assessment and recommendation based on the outcomes of the pilot projects. The government will then use this report to make a decision on the future viability of UCG in Queensland.

 

Q: Who is on this “scientific panel”?

A: Three high-calibre scientists were selected to undertake the important task of reviewing the UCG technology:
Dr Christopher Cuff of C&R Consulting;
Professor Chris Moran, Director of Sustainable Minerals Institute, University of Queensland; and
Professor Joe da Costa, School of Chemical Engineering, University of Queensland.

 

Q: Has the “scientific panel” started work on this?

A: Yes, the panel of independent scientific experts has begun work on the technical and environmental assessment of the UCG Pilot Projects.

 

Q: How will the “scientific panel” help the government?

A: The scientific panel will assist the Government in the following areas:

  1. Technical viability of large scale development of the UCG Technology
  2. Environmental sustainability of large scale development of UCG Technology
  3. Analysis of Environmental impact of the technology on the local community and other coal resource uses.

 

Q: What are the reporting process and the timeframes?
A: Each of the three Pilot Projects will submit a detailed technical report of all activities, impacts and findings of its Pilot Project no later than June 2011.
The Panel will review the Pilot Project Reports, focusing on the technical and environmental aspects of the UCG technology. The Panel will submit its analysis to the “Interdepartmental Working Group” in mid to late 2011.
The “Interdepartmental Working Group” will report to Government on the future viability of UCG technology in Queensland, including an assessment of the potential costs and benefits of UCG for the State and advice on the environmental sustainability of UCG in Queensland.
This report is expected to be completed by the end of 2011 for Government consideration.


Activity

Indicative Timeframe

Appointment of Panel Members

Nov-09

Panel Terms of Reference Ratified

Dec-09

Panel Interm Report

Mar-10

Feedback to Pilot Projects

May-10

Panel Interm Report

Dec-10

Feedback to Pilot Projects

May-11

Pilot Reports Reviewed

Jul-11

Feedback to Pilot Projects

Sep-11

Panel Final Report

Sep-11

Review of Govt Report

Dec-11

 

Q: When will the “pilot” phase finish?
A: The Pilot Phase will finish when the Government makes its decision regarding the future viability of a UCG industry in Queensland.

 

Q: Ammonia is a hazardous substance, how will you manage this?
A: Liberty intends to manage this risk by adhering to the strictest possible industry standards during the design, construction, and operating phases of the project.
Yes, ammonia is a hazardous substance and has the potential to be highly toxic to a wide range of organisms, but you should remember that worldwide ammonia production is huge and has been in place for many decades. So it’s a mature process that has much development and a history of safe handling behind it.

 

Q: What is urea used for?
A: Urea is primarily used as a fertilizer. The currently estimated annual demand according to the International Fertilizer Industry Association (IFA) is in excess of 150 million tonnes per annum.
Urea can also be used as a feedstock for the production of urea-formaldehyde resin, or as urea-melamine-formaldehyde flame-proofing agent used in dry chemical fire extinguishers and even as urea-potassium bicarbonate.

 

Q: What is Australia’s current fertilizer consumption?
A: Australia currently consumes approximately 1,330,000 tonnes of urea a year. We make only about 250 000 tonnes locally - so Australia relies on the Middle East for the vast bulk of its supply.
Australian Urea Consumption in 2008
Queensland 256,000 tonnes
New South Wales 290,000 tonnes
Victoria 202,000 tonnes
South Australia 132,000 tonnes
Western Australia 430,000 tonnes
Tasmania 20,000 tonnes

 

Q: Does UCG have much of a History?
A: Yes, it has a history that goes back over 100 years.

 

Q: Will the local community see any benefit from the Urea Corp Fertiliser Project?
A: Yes we believe so. The potential socioeconomic opportunities from our Project include;
Increased employment;
Increase facilities for the community;
Increased opportunities for existing retailers and business;
Increase population;
Increase schooling numbers.
It is likely that our Project will have a substantial positive benefit to the local community in many ways. Importantly these benefits are not short term given the project life potential could be as long as 300 years.

 

Q: What are the environmental implications of UCG?
A: Every mining or large industrial project has the potential for environmental implications. UCG is the same. We believe that our project has some real advantages and can help reduce environmental impacts - plus we will ensure that our project manages the environmental risks.

 

Q: What is an IAS?
A: IAS stands for “Initial Advise Statement”. An IAS is the first big step in the approvals process. Liberty + Urea Corp have prepared a draft IAS as at July 2011 for the government to consider and decide whether to award our project the status of “Significant Project”. If we get this status - then we move on to the next part of the approval process called the EIS (Environmental Impact Statement).

 

Q: What are the 6 Key features that make the Liberty Urea Corp Fertiliser Project so appealing?
A: (1) Makes urea for food production
(2) Stable feedstock and energy costs
(3) Value adding to an Australian commodity
(4) Good investment returns
(5) Utilises a resource otherwise inaccessible
(6) Provides jobs and opportunities in Australia

 

Q: If you own your own source of energy does that make a big difference on the project?
A: Yes, we definitely think it’s a key to our project.
Owning the source of energy feedstock means that the price to supply is not at risk of changing due to market price conditions. It gives us certainty on the supply to always ensure we have enough feed-stock for our needs. It means we are not beholden to a third party for our success.

 

Q: Do you think that world demand will increase? Do you think you will be able to sell your Urea Fertiliser?
A: Yes, we do believe the world demand for fertiliser will increase, although there are, of course, no guarantees. Theoretical economics says that it is more likely the price of urea will rise over time than fall, due to increased population demand for food.

 

Q: How many components does your plant have?


Major Component

Sub Component

Ancillary Components

UCG Field Facilities

UCG Field

UCG Field Wells

UCG Field Surface Facilities

Gas Cleanup Plant

Filtration

Scrubbing / Sour Water Stripping

COS Hydrolysis

Mercury Removal

Sulphur Plant

Acid Gas Removal

Ammonia Facilities

Ammonia Synthesis Plant

Infrastructure Facilities

Water Treatment Plant

Power Generation Plant

Air Separation Unit

Pipeline Component

Pipelines

Ammonia Pipeline

Carbon Dioxide Pipeline

Urea Facilities

Urea Facilities

Urea Synthesis Plant (located in Gladstone)

 

Q: How many jobs do you think the Urea Corp Fertiliser Project will create?
A: About 1500 jobs are anticipated during the construction phase and about 700 direct and indirect positions during the operational stage of the Project.

 

Q: What do you think the timing will be for the Urea Corp Fertiliser Project?

 

Q: You want to build a pipeline, do you think that will be possible?
A: Yes, we think it is possible. Whilst we have lots of approvals to gain, Queensland has many pipelines supporting the gas industry. We are hoping that a nearby pipeline easement - running from the Denison to Gladstone - will allow us to co-locate our pipeline thus greatly assisting us with the building process.

 

Q: How do you actually go about building the pipeline?
A: Basically, we clear the path, deliver the pipeline sections, dig a trench, construct the pipeline , weld the pipeline sections together, test and certify, lay them into the trench, bury the pipeline, re-instate the land and vegetation and then, and commission.

 

Q: Will building a pipeline create many new jobs?
A: Yes, it is anticipated it will create about 400 jobs during the peak of construction and take 12-18 months to complete.

 

Q: Is a pipeline a good thing for the Urea Corp Fertiliser Project?
A: Absolutely yes! Firstly it means that we can avoid using rail and road to transport our urea fertiliser to the Port. This has 3 major advantages - the operating costs are over 90% lower, a pipeline is not affected by labour strikes, weather, mechanical breakdown or the price of diesel and we own the infrastructure and will have guaranteed use.

 

Q: What sort of potential impact will the Project have on the Environment?
A: Well, this is a detailed question and too big to answer fully here. What we can say is that yes, a project of this size and magnitude will have an impact - the most obvious is that we are planning to build a plant (with supporting roads and buildings) in the middle of Queensland - so yes, the project will have impact.
But, when compared to other mining projects of the scale - it is far better as it has (much) less of an impact - especially when compared to an “open” mining process.
Obviously, given the strength of the environmental protection laws - the impact is highly managed and these rules strictly enforced.

 

Q: Is the location of the plant suitable?
A: Yes, after extensive review and concept development work, we still consider the proposed location of the plant to be a suitable and sensible choice.

 

Q: What type of use is currently on the site?
A: The site is remote, with the only active use being some state logging of pine trees.

 

Q: Are there any wetlands or water problems you need to sort out?
A: From the data in our preliminary environment report the site looks to be without any major wetland or water issues on the resource areA: We have two major creeks but no wetland designated areas that need lots of attention.

 

Q: What type of existing vegetation is on the site? Is it valuable and will it be harmed?
A: On the resource area (MDLA446) and on the proposed project area we have designated category C state forest (logging forest). There is no designated “Strategic Cropping Land” or “Good Quality Agricultural Land” identified near this areA:

 

Q: Do any families or people have farms on the site?
A: There are no homesteads on the MDLA 446 and near the proposed project are

 

Q: I bet you have lots of laws to deal with, what are these going to be?

Project Activity / Component

Relevant Legislation / Regulations

Development of UCG Component

Sustainable Planning Act 2009 (Qld) (previously the Integrated Planning Act 1997)
State Development & Public Works Organisation Act 1971 (Qld)
Environmental Protection Act 1994 (Qld)
Petroleum and Gas (Production and Safety) Act 2004 (Qld)
Water Act 2000 (Qld)
Land Act 1994 (Qld)
Native Title (Queensland) Act 1993 (Qld)
Nature Conservation Act 1992 (Qld)
Queensland Heritage Act 1992 (Qld)
Aboriginal Cultural Heritage Act 2003 (Qld)
Soil Conservation Act 1986 (Qld)
Environmental Protection Act 1994 (Qld)
Upcoming Guidelines, Regulations, Authorities and Permits currently under development (Qld)
Environment Protection & Biodiversity Conservation Act 1999 (Cth).

Construction of pipeline network

All / any relevant Guidelines, Regulations, Authorities and Permits currently under development within Local, State and Federal Government departments.
State Development & Public Works Organisation Act 1971 (Qld)
Sustainable Planning Act 2009 (Qld)
Environmental Protection Act 1994 (Qld)
Petroleum and Gas (Production and Safety) Act 2004 (Qld)
Land Act 1994 (Qld)
Native Title (Queensland) Act 1993 (Qld)
Aboriginal Cultural Heritage Act 2003 (Qld)
Nature Conservation Act 1992 (Qld)
Queensland Heritage Act 1992 (Qld)
Soil Conservation Act 1986 (Qld)
Fisheries Act 1994 (Qld)
Water Act 2000 (Qld)
Coastal Protection and Management Act 1995 (Qld)
Marine Parks Act 2004 (Qld)
Great Barrier Reef Marine Park Act 1975 (Cth)
Environment Protection & Biodiversity Conservation Act 1999 (Cth)

Construction of Urea Production Plant at Gladstone (including any marine facilities that may be used)

Note: The final configuration of the Urea Production Plant will determine the need for further permits and/or licenses and/or approvals

Environment Protection & Biodiversity Conservation Act 1999 (Cth)
State Development & Public Works Organisation Act 1971 (Qld)
Petroleum and Gas (Production and Safety) Act 2004 (Qld)
Marine Parks Act 2004 (Qld)
Coastal Protection and Management Act 1995 (Qld)
Fisheries Act 1994 (Qld)
Integrated Planning Act 1997 (Qld)
Transport Infrastructure Act 1994 (Qld)
Transport Operations (Marine Pollution) Act 1995 (Qld)
Great Barrier Reef Marine Park Act 1975 (Cth)

Operation of the Urea Production Plant

Sustainable Planning Act 2009 (Qld)
State Development & Public Works Organisation Act 1971 (Qld)
Environmental Protection Act 1994 (Qld)
Petroleum and Gas (Production and Safety) Act 2004 (Qld)
Land Act 1994 (Qld)
Foreign Investment Review Board Act 1975 (Cth)
National Greenhouse and Energy Reporting Act 2007 (Cth)

Production and disposal and/or beneficial use of associated water.

Water Act 2000 (Qld)
State Development & Public Works Organisation Act 1971 (Qld)
Petroleum and Gas (Production and Safety) Act 2004 (Qld)
Mineral Resources Act 1989 (Qld)
Environmental Protection Act 1994 (Qld)