Since we entered into our first international energy project in South America with global mining giant, Antofagasta Minerals S.A., significant progress has been made. The agreement was signed at the end of 2009 to jointly assess and develop Antofagasta’s deep coal deposit adjacent to the town of Mulpun in Chile using keyseam. Antofagasta Minerals has formed a new energy division called Mulpun Energy which has day-to-day carriage of the project located in southern central Chile, 800 kilometres south of Santiago.
Chile provides an attractive market for energy projects due to the nation’s reliance on imported fuel and rapidly growing energy demand of 8% p.a. When Carbon Energy initially considered the Mulpun Project in late 2009, electricity spot prices were US$120 per MWh. Recently, reports have indicated that spot prices have increased to US$220 per MWh making these some of the highest power prices in the world.
The first major project milestone was achieved in August 2010 when Mulpun Energy obtained Environmental Approval for the parties’ first stage joint underground coal gasification (UCG) project in Mulpun. This has paved the way for the development of the project and allows us to construct and operate a pilot project that includes our first UCG panel and on-site facilities. The purpose of the pilot project is to confirm the gas quality produced from the Mulpun coal deposit to enable detailed design work and equipment installation to be undertaken for a major power generation project at that site.
In June 2011 we completed our maiden JORC Resource Assessment for the Mulpun coal deposit in Chile. The JORC Resources estimate totals 103 million tonnes at 2 metre coal seam thickness cut-off (Measured: 26 million tonnes, Indicated: 37 million tonnes, Inferred: 40 million tonnes). This was our first international JORC Resource Assessment and upon completion of agreed milestones we have the rights to a contributing 30% interest in the Mulpun deposit.
This 103 million tonne coal resource could produce approximately 1,100 petajoules (PJ) of syngas1 based on conservative assumptions.
Energy output of this scale would be sufficient to operate a 300MW power station for over 55 years making this a significant energy resource in the Chilean market.