Leigh Creek Energy forges ahead with development of $2.6b urea project
Leigh Creek Energy is a step closer to achieving commercial rates of gas flow from its namesake synthesis gas project.
Aspiring urea supplier Leigh Creek Energy (ASX: LCK) has reported strong progress towards the development of its $2.6 billion namesake project north of Adelaide in South Australia.
In its quarterly report released today, the company confirmed South Korean engineering, procurement, construction and commissioning (EPCC) contractor Daelim has continued to advance a program of works associated with the project’s stage two front-end engineering and design (FEED) during the period.
Australian contractor Silver City Drilling was awarded a drilling contract for stage one works and has secured the rigs required to complete wells for gasification operations, investigation, monitoring and water supply.
Environmental firm EMM Consulting was appointed to assist with the downstream development approvals process, while the supply of Siemens power generators to power the stage one operations is on track for completion before mid-year.
Offtake agreement
In November, Daelim and Leigh Creek entered into a heads of agreement for offtake of a minimum 500,000 metric tonnes of granular urea per year over a minimum five years.
It will potentially be the only offtake agreement needed to secure the balance of capital funding for the project.
Leigh Creek confirmed that an “exceptionally low” production cost of $109 per tonne of carbon neutral urea fertiliser plus high margins would provide “sufficient certainty” for financiers.
“However, this does not exclude securing other offtake agreements and we continue to progress additional discussions with other parties,” the company said.
Carbon capture and storage
An independent feasibility study by engineering group inGauge confirmed the project has all of the critical elements needed for large-scale retention of carbon dioxide within an underground storage facility (carbon capture and storage, or CCS).
Leigh Creek said the next step will involve Daelim incorporating the CCS plans into the FEED process.
Low-cost fertiliser
The Leigh Creek project aims to develop low-cost, nitrogen-based fertiliser for local and export agriculture markets and will produce an initial 1 million tonnes per annum of urea, with potential to increase to 2Mtpa.
It will be one of the biggest infrastructure projects of its type in Australia, providing long-term economic development and employment opportunities for the communities of the Upper Spencer Gulf region, northern Flinders Ranges and South Australia.
Leigh Creek will be the nation’s only fully-integrated urea production facility, with all inputs for low carbon urea production based on-site.