Claromeco Coal Basin, Argentina

Carbon Energy took another step in advancing its strategy to license the Company’s UCG technology globally, announcing on 23 June 2013 that it had signed a Memorandum of Understanding (MOU) with the Delmo Group (Delmo) to provide its keyseam® technology and related services for a commercial scale underground coal gasification (UCG) project in Argentina.

Carbon Energy will earn:
  1. US$10 million technology licence fee with US$7.5 million paid on completion of the Bankable Feasibility Study and US$2.5 million on successful ignition of the initial Process Characterisation Panel.
  2. Technology services fees, and
  3. Ongoing royalty once first revenue is generated from the project.

Delmo is an Australian based and privately owned diversified investment group with interests in property development, mining, and energy. Delmo has strong cultural and physical links with Argentina with a South American regional office based in Buenos Aires and also benefits from their broad network of contacts in the Argentine government and business community.

Delmo acquired the coal exploration rights to over 600,000 hectares of land in the Claromeco Coal Basin in Argentina. The initial 300MW sized power plant will be connected directly to the local and national electricity grid, with further expansions planned.

Argentina is faced with rising electricity demand. The government of Argentina is in the process of commissioning large projects, both in the generation and transmission sectors to try and meet this demand. Delmo was quick to identify the opportunities for UCG in Argentina as a result.

The first stage of the project will involve a geological analysis of the sites to assess the UCG potential and to identify gaps in available coal data. Following this, the most suitable site will be selected once all relevant information is collected through further drilling and seismic information.

In parallel Delmo, its in-country partners and Carbon Energy will also progress the following key milestones in relation to the project:
• Secure an electricity off-take agreement from the governmental administrators of the wholesale electricity market in Argentina;
• Secure in-country funding for the project;
• Complete the Bankable Feasibility Study; and
• Determine and agree the levels of assistance available from the Argentine Government to aid the project development.