The document concludes that UCG gas production is ready for commercialization based on the following evidence: 1) There is a very long history of over 70 years of coal gas production and use as well as a long history of UCG gas production. 2) The technology for UCG gas production and use has been proven based on gas production pilot tests and commercial IGCC plants operating in other countries. 3) Perceived barriers to the development of UCG gas production have been overcome, and the current commercial potential is high based on the successful Chinchilla pilot project in Australia.

1. UCG COMMERCIALISATION CONCLUSION UCG gas production process is ready for commercialisation EVIDENCE Very long history of coal gas production and use Long history of UCG gas production and use Proven technology for UCG gas production and use Perceived barriers to development overcome Current commercial potential is high

2. COAL GAS HISTORY 1802 - First street lights in UK using coal gas 1812 - First gas works in UK 1820s- First coal gas light in Sydney 1862 - Hong Kong & China Gas Co. formed 1870s- Gas cooking introduced to Australia 1965-1975 Natural gas replaces coal gas in Australia 2002 - Hong Kong and China Gas Co produces and distributes 9 million cu.m. gas per day through 2800 km of pipe 2002 - IGCC plants operating in many countries

3. UCG GAS HISTORY FSU - Over 15 m t coal gasified since 1950s. Est. cost US$10 billion USA - 50,000 t coal gasified since 1970s. Est. cost US$300m Europe - Less than 10,000 t coal gasified since 1950s. Est. cost US$100m Australia - Over 32,000 t coal gasified 2000 – 2002. Est. cost US$5m

4. TECHNOLOGY FOR COMMERCIAL USE Gas Production - more than 70 years of gas production and pilot test work Gas Clean-up – filter systems developed for IGCC plants in US and Europe Power Generation - low BTU combustors developed for turbines in IGCC plants

5. CURRENT COMMERCIAL POTENTIAL Chinchilla pilot burn has established Continuous gas production for 30 months Demonstration of decommissioning Proven environmental acceptance Feasibility studies for power generation from 40 to 400MW, using proven plant Highly competitive economics (<US1.5c/kWh)

6. UCG PILOT PLANT BURN CHINCHILLA, QLD

7. CHINCHILLA GAS PRODUCTION Dec 1999 – April 2002 After Blinderman et al. (2002)

8. UCG COMMERCIAL BENEFITS Wellhead gas costs less than 50% of natural gas on an energy equivalent basis Base load p ower costs using UCG gas comparable with much large r supercritical coal-fired stations Additional revenue from sale of by-products CO2 emissions for CCGT power plant 2 5 % less than best coal-fired stations Added emission benefits with CO2 sequestration Wide range of alternative uses for UCG syngas

9. COMMERCIAL ISSUES BEING OVERCOME No access to FSU experience to the West Resolved using Exergy UCG technology Concerns for environmental issues Satisfied by monitoring evidence Perceived high cost of production Resolved by Chinchilla costed plant design Focus on Govt.-funded R&D Industry support being developed Financing for “first-of-a-kind” project Issues identified – task incomplete