Ergo Exergy - UCG

April 14, 2014

Chinchilla UCG Site: Clean Environmental Record 1999–2006

The Queensland Department of Environment and Heritage Protection (DEHP) has filed charges against Linc Energy for causing serious environmental harm; however the coal seam gasification company denies any wrongdoing.

Ergo Exergy Technologies Inc. (Ergo Exergy) was informed that DEHP is conducting an investigation into the Linc Energy’s UCG site at Chinchilla. The investigation is into the alleged contamination of the groundwater and emissions experienced at the site during the operation of "gasifiers 2, 3 and 4." These "gasifiers" reportedly operated within the period from December 1, 2007 to December 1, 2010.

Ergo Exergy provided εUCG technology for the Chinchilla UCG project from its inception in January 1997 to September 2006; on November 10, 2006 we formally terminated our remaining relationship with the project owner, Linc Energy Ltd.

The UCG related work on the Chinchilla site commenced in July 1999. Following exploration, site characterization and construction, gas production at the Chinchilla UCG site began on December 26, 1999. After that the gas was produced continuously until April 2002 when the process of Controlled Shutdown was initiated. The Controlled Shutdown was successfully completed in April 2003, following which the Chinchilla site was maintained with minimal staff. No UCG gas production operations had been conducted at the Chinchilla site from April 2003 until Ergo Exergy’s departure in November 2006. It is our assumption that later on Linc Energy started referring to the initial UCG panel described above as "gasifier 1."

A rigorous environmental management and monitoring program had been conducted at the Chinchilla UCG site from its establishment until November 2006 under an Environmental Management Plan. After commencement of UCG operations and gas production on December 26, 1999, environmental audits have been conducted annually. The audits have been performed independently by the Sinclair Knight Merz consulting company. No environmental issues have been reported in all seven audits conducted until November 2006. All the audit reports and reports on environmental performance have been submitted to the Queensland EPA in Toowoomba, to Geoff Power, the officer who at the time was overseeing the Chinchilla site at the EPA.

Groundwater monitoring at the Chinchilla UCG site from June 1999 to November 2006 had been conducted by the Golder Associates consulting company. Detailed reports have been prepared quarterly. No environmental issues with groundwater have been detected. The results of groundwater monitoring at the Chinchilla UCG site through its Controlled Shutdown had been published. Environmental performance of the Chinchilla UCG site until 2006 had been acknowledged internationally as a demonstration of an environmentally clean UCG operation and shutdown.

At the time of Ergo Exergy’s departure in November 2006, no environmental issues at the Chinchilla UCG site had been detected; the UCG operations had been successfully shut down and long ceased since April 2003. Independent environmental audits and groundwater monitoring reports indicated no environmental issues on the site.

Ergo Exergy has no knowledge of the events on the Chinchilla UCG site past November 2006; specifically, we have no information regarding "gasifiers 2, 3 and 4" during their reported time of operation between December 1, 2007 and December 1, 2010.

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