Expansion plans: Leigh Creek Energy looks to upgrade its gas reserve as potential buyers line up
Link copied to
Leigh Creek Energy (ASX: LCK) is working with industry experts to get approval for an upgrade of its gas reserves.
Shares in the company took off last week when it announced a successful production run for commercial quantities of synthetic gas.
Since Tuesday February 21, they’ve risen by more than 100 per cent to 21 cents.
From 2C to 2P
LCK expects its deposit is big enough to produce commercial quantities of gas “for over 20 years”. And it now wants to get industry certification for the reserve.
A 2C resource is a best estimate of how much oil or gas is in a deposit, while a 2P reserve means it’s proven and probable.
LCK obtained 2C status in early 2016 in accordance with the international standards set out by the Society of Petroleum Engineers.
Testing for the certification was carried out by the Denver-based MHA Petroleum Consultants, and LCK has retained them again to advise on the 2P certification.
The company said it expects to provide an update on the 2P approval process before the end of the March quarter.
Step right up
If it obtains 2P status, LCK’s gas deposit will be the fifth biggest proven reserve on Australia’s east coast.
And the company is taking expressions of interest (EOI) for Australian gas retailers and large commercial users.
The company received “over a dozen formal responses”, based on estimated purchase agreements of up to 50PJ per year.
And in order to meet that quota, LCK will have to significantly ramp up its production capabilities.
The company’s first commercial gas demonstration was carried out from just a single pacifier. But to run a full-scale commercial operation it plans to increase the number of pacifiers to 20.
The results of the EOI process will provide valuable insight into how many gasifiers LCK’s offtake customers require, and the number of gasifiers required for LCK to develop sufficient resources for its own needs