Altona Energy Regulatory News (ANR)

16 May

Altona Energy Plc / Index: AIM / Epic: ANR / Sector: Exploration & Production

Altona Energy Plc (AIM:ANR)

Evaluation Agreement for Production of Renewable Methanol from CO2

Highlights

·; Agreement with Carbon Recycling International ('CRI"), holder of proprietary technology for the production of renewable methanol from carbon dioxide (CO2) 

·; Evaluation of potential for the production of fuel grade renewable methanol from CO2 captured at the Ackaringa coal-to-liquid ('CTL') project, in South Australia

·; CRI currently has a commercial plant under construction at Svartsengi geothermal power station in Iceland, to produce 5 million litres of renewable methanol per annum

Altona Energy Plc ('Altona' or 'the Company'), the AIM-listed Australia-based energy company, is pleased to announce that it has entered into a Memorandum of Understanding (the "Agreement") with Icelandic based clean energy company CRI, holder of proprietary technology for the production of fuel grade renewable methanol from CO2 and hydrogen. CRI currently has a commercial fuel grade renewable methanol plant under construction in Iceland based on CO2 sourced from geothermal wells and hydrogen produced from electrolysis of water.

Under the Agreement, Altona and CRI will work together to evaluate the application of CRI's technology at the Arckaringa CTL Project, through using the CO2 captured for sequestration, with the hydrogen produced in the synthesis gas in the Fischer-Tropsch Process production of diesel. The concept proposed to be evaluated by Altona and CRI is for a scalable renewable methanol plant at Arckaringa, producing 100 million litres per year of renewable methanol. This plant could be increased in modular form to meet future market demand. The Directors believe the potential expansion of the plant could be up to 500 million litres of renewable methanol.

The Arckaringa Project is a Joint Venture between Altona and CNOOC-NEIA (a subsidiary of Chinese oil major CNOOC) to evaluate developing the estimated 7.8 billion tonne Arckaringa coal resource (of which 1.287 billion tonnes is JORC compliant). The current base case for the Arckaringa bankable feasibility study ('BFS') is a 10 million barrel per year CTL plant and 560MW co-generation export power facility.

CRI is currently constructing a plant in Iceland adjacent to the Svartsengi geothermal power station, that will be capable of producing 5 million litres of renewable methanol per year. The processed product is a clean burning high octane fuel. The Svartsengi renewable methanol plant will use only captured geothermal carbon dioxide, water and power from the geothermal power station. This process is based on technology developed and patented by CRI. The Svartsengi plant is scheduled for commercial operations early Quarter 3 of 2011. CRI is currently designing a second plant at the Krafla geothermal power station in Iceland with a capacity of 100 million litres per year of renewable methanol.

Peter Fagiano, Executive Director of the Company responsible for Project Technology said: "I have had the privilege of working closely with the management of CRI in developing the Svartsengi renewable methanol plant, which through their proprietary process will produce significant levels of fuel from CO2 emissions. In addition to creating a commercially viable product from captured CO2 currently proposed for sequestration, there is potential to deploy the technology using different feedstocks such as biomass waste. We very much look forward to working with CRI and the commercialisation of their leading technology. "

Chris Lambert, Chairman of Altona commented: "The CRI technology has the exciting potential to further advance the Arckaringa Project through applying the captured CO2 as a feedstock for the commercial production of renewable methanol, significantly improving the carbon footprint of the Project, whilst adding to the gasoline pool and energy security of South Australia. "

**ENDS**

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Notes

Altona Energy Plc is an AIM listed Australian based energy company. Its asset is an estimated 7.8 billion tonne coal resource (non-JORC) in the Arckaringa Basin of South Australia (JORC-compliant: 1.287 billion tonnes). This is considered by the Board to be one of the world's largest untapped energy banks. Per Jacobs Engineering's study for the Company, assuming a 50% conversion of CTL fuels and 50% to synthetic gas ('Syngas'), Arckaringa total coal resources (both JORC and non-JORC) would represent respectively 28% and 29% of current North Sea remaining proven reserves of 10,900mb of oil and 114,800 bcf of natural gas. 

Altona has already accomplished a number of key phases in its development:

·; The Company has agreed the terms of a joint venture agreement with CNOOC-NEI, a subsidiary of Chinese oil major China National Offshore Oil Corporation, to accelerate the Arckaringa Project towards commercialisation. 

·; Under the terms of the agreement, CNOOC-NEI will fund the bankable feasibility study ('BFS') for a coal mine and an integrated value-added project. 

·; The current base case is a 10mb per year CTL plant and 560MW co-generation power facility. 

·; CNOOC-NEI will also act as the operator and take responsibility for assessing the full potential of the coal resource, in return for a 51% interest in the exploration licences. 

·; It is envisaged that numerous new additional projects may also be opened up to create a multi-project, multi-national business. 

Carbon Recycling International

Carbon Recycling International captures carbon dioxide from industrial emissions and converts carbon dioxide into Renewable Methanol (RM). RM is a clean fuel and can be blended at different levels with gasoline to meet renewable energy directives. The capture of carbon dioxide minimizes emissions from energy intensive industries. It is compatible to the existing energy and fuel infrastructure.

The production of RM is feasible in many locations in the world with biomass, geothermal, wind, and solar energy sources. CRI plans to build commercial plants for domestic consumption and for export to other European countries

CTL

The quality of the Company's coal is suitable for conversion to synthetic gas ('Syngas'), using existing commercial CTL technologies. The process involves two major stages;

1. gasification to produce Syngas rich in hydrogen and carbon,

2. a liquefication stage where the Syngas is reacted over a catalyst to produce high quality, ultraclean synthetic fuels and chemical feedstocks. 

CTL is a prime example of clean coal technology - the associated combined cycle units produce negligible sulphur oxides, significantly less nitrogen oxides and 10-20% less CO2 per unit of power generated than a conventional coal fired plant, whilst carbon capture and storage offers the potential to reduce the overall greenhouse gas emissions from CTL to below the 'well to wheel' level of fuels derived from crude oil. The technology is best demonstrated in South Africa, where currently 30% of the country's gasoline and diesel fuel needs are met through CTL plants.