A Deep Dive Into Leigh Creek Energy Project And Related Certifications

  • May 28, 2019 AEST
  • Team Kalkine
A Deep Dive Into Leigh Creek Energy Project And Related Certifications

On 28 May 2019, energy company Leigh Creek Energy (ASX: LCK) provided an additional information to the recently secured Petroleum Resources Management System (PRMS) certification from the US-based MHA Petroleum Consultant.

PRMS Reserve Certification was awarded to LCK post the two pre-conditions being satisfied, which included a successful production test and a JORC compliant Indicated Resource estimation. The certification relates to 1,153 PJ 2P Reserve for the Leigh Creek Energy Project (LCEP), which represents an estimated sum of proved and probable reserves of a hydrocarbon resource considered to be reasonably recovered under current economic and technical conditions.

As previously announced by the company, LCK’s Pre-Commercial Demonstration (PCD) returned a successful production test as verified by MHA Petroleum Consultants, a specialist independent oil & gas engineering firm in Denver, USA.

PRMS is internationally accepted and provides an approach to evaluating projects, estimating petroleum quantities and presenting results. It is published in strict accordance with various global petroleum organisations including American Association of Petroleum Geologists (AAPG), Society of Petroleum Engineers (SPE), and Society of Petroleum Evaluation Engineers (SPEE).

In the case of LCK’s PRMS certification, Geological and Modelling Report (JORC Resource Estimation Project Assessment) was prepared by GeoConsult Pty Ltd in March 2019.

Leigh Creek’s JORC and PRMS reports, based on three different coal seams in the Telford Basin (the upper, main and lower series formations), reportedly indicated the existence of a scope to further increase the LCEP’s gas reserves overtime by undertaking explorations, seismic work and production test on the upper and lower series coal formations in Telford Basin.

Telford Basin (Source: Company’s Announcement)

LCK JORC Report for its LCEP showed 62% of coal related to Indicated Resources and 38% for Inferred Resources out of a total of 301mt of coal reported in Telford Basin. However, it has been informed that LCK’s PRMS certification of 1,153 PJ of 2P Reserve only relates to 31% of the coal available to the LCEP within the Telford basin.

Few series including 93.6mt of Indicated resource in the upper series and 114.6mt of Inferred resource in the main and lower series were not subject to PCD, which derived the 1,153 PJ of 2P Reserves, as per the report.

Summary of LCEP JORC (Source: Company’s Announcement)

LCK’s 1,153 PJ of 2P Reserves represents East Coast Australia’s largest uncontracted gas reserve. The announcement reads that PCD confirmed the quality and volume of the gas product would justify a substantial commercial project. Based on the initial PRMS certification, a maximum estimation of 50-80PJ per annum of gas is available to be converted into commercial projects, justifying a 20+ years project, told LCK.

Based in Adelaide, Australia, the company remains in active discussion with financial and strategic partners to execute the strategies. LCK confirmed multiple commercialisation routes for the asset of such quality and is currently studying two business options with significant positive economic returns:

  • Sale of synthetic natural gas to Australian East Coast Market
  • Using the gas to manufacture ammonia-based fertiliser products

LCK last traded at $0.290, up 1.754%, on 28 May 2019.Over the past 12 months, the stock has surged up by 78.12% and its year-to-date return stands at positive 137.50%.


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