Leigh Creek Energy takes next step towards gas production in South Australia

Junior gas explorer Leigh Creek Energy (ASX: LCK) is one step closer to demonstrating gas flow at its Leigh Creek energy project (LCEP) in South Australia after receiving the second of three required activity notifications, as stipulated by regulators.

The LCEP is expected to produce high-value products such as electricity, methane, synthetic natural gas and ammonium nitrate products including fertiliser and industrial explosives from the remnant coal resources at Leigh Creek, utilising In Situ Gasification (ISG) technologies.

“Site construction mobilisation activities commenced immediately after approval of the first activity notification and are on schedule,” said Phil Staveley, managing director of Leigh Creek Energy.

Mr Staveley added that Leigh Creek and its drilling contractor will now drill three ISG process wells, and “progress towards planned gas operations in Q3 2018,” thereby unlocking a significant energy resource in South Australia.

Stepped process nearing completion

The company received its first activity notification on April 19th, 2018 which authorised surface plant construction. The second grant announced today approved well drilling with the third and final notification expected to allow operating, decommissioning and monitoring activity to commence.

Once the third activity notification is received, Leigh Creek says the “PCD can be operated”, which effectively represents the company’s first gas flow at the Leigh Creek project.

The gas junior is progressing toward its immediate objective of demonstrating gas flow from its 2,963.9 petajoules 2C resource, with a portion of the resource expected to be upgraded to a 2P reserve in the coming months.

In tandem with its contractors, Leigh Creek was able to commence activities for the assembly of PCD modules and supporting services and equipment immediately after approval of the first approval in April, adding that this schedule is “on target and is expected to take approximately 8 weeks to complete from approval.”

With the second approval in-hand Leigh Creek says it will drill three process wells to service the underground ISG chamber which it expects to take 4-5 weeks in concurrence to its other development work on site at the LCEP.

“Over the coming weeks we will regularly advise our shareholders and the market of our progress and the anticipated date of first gas production as well as other important announcements,” the company said.

Today’s news gave Leigh Creek shares a 6% boost up to A$0.17 per share in early afternoon trade.