Altona Energy Regulatory News (ANR)

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

19 July 2010

Altona Energy Plc ('Altona' or 'the Company')

Arckaringa Project Update

Altona Energy Plc, the AIM listed Australian based energy company, is pleased to announce an update on the Arckaringa Unincorporated Evaluation Joint Venture ('the JV') with CNOOC NEIA, a subsidiary of CNOOC, one of China's major oil companies. The Company has successfully completed the extension and transfer of interests in the Exploration Licences ('EL's) central to the JV and can confirm that the appointment of the Study Engineer selected by Altona is currently pending the completion of CNOOC-NEI approval processes.

The South Australian Minister for Resources Development's consent for both the new term of the EL's and for the terms of the JV Agreement, together with the recent successful FIRB assessment, concludes the actions necessary to satisfy the Condition Precedent regarding Australian Federal and State Government approvals for the JV Agreement to become effective.

Altona's Managing Director Chris Schrape commented that, "The granting of the new exploration licences and consent for the transfer of a 51% interest to our JV partner in the Arckaringa Project, in return for their full funding of the BFS, provides security to the JV and underpins its work on the project. Most recently, leaders from the Chinese and Australian Governments, alongside the President of CNOOC itself, joined us at the ceremonial signing of the JV, again demonstrating the level of support for this project and its potential to alleviate South Australia's forecasted energy shortfalls."

Extension and Transfer of Exploration Licences

The Company has completed the necessary steps to extend the term of its Exploration Licences and to effect the transfer of interest in the EL's, as required under the Arckaringa Unincorporated Evaluation Joint Venture ('JV Agreement') with CNOOC NEIA.

Combined, the EL's contain an estimated 7.8 billion tonne coal resource (non JORC), of which 1.287 billion tonnes is JORC compliant, and in the opinion of Altona's Board, represent one of the world's largest undeveloped energy banks, capable of conversion into high value products such as diesel fuels, power and industrial feed-stocks.

The term of the original EL's held by Arckaringa Energy, Altona's wholly owned subsidiary, expired as scheduled on 5 June 2010. Based on the facts that all previous expenditure and reporting commitments have been met by the Company and that firm development plans are in place for the future, the SA Government through PIRSA have granted 'Subsequent Exploration Licences'. These subsequent EL's have new numbers, but otherwise cover exactly the same areas in the Arckaringa Basin of South Australia. The minimum annual expenditure commitments are, as per normal policy for the grant of subsequent EL's, double those of the previous EL's, but the anticipated expenditure under the BFS will more than cover these commitments. Details of the EL's are as follows:

Study Engineer

As required under the JV Agreement, the BFS Study Engineer appointment must be ratified by both JV parties. The appointment of the Study Engineer selected and proposed by Altona, following a rigorous bidding process involving many of the world's leading project engineering firms, is currently pending the completion of CNOOC-NEI approval processes. During the period leading up to the formal appointment, Altona and CNOOC-NEI have been actively working with the Study Engineer designate on finalising detailed work programmes and budgets to be agreed by the JV parties.

**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. 

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.