LNC - Linc Energy

basilio said:

Mickel thanks for your figures on a Velocys GTL plant.

I'd love to believe it but somehow I just don't think it is "right". $10m to build a 2500bopd GTL plant seems absurdly cheap. Simply speaking LNC has easily had or could borrow $10m which would then produce approximately $7.5 m gross a month (2500 x $100 p/b x 30 days) . If that was the case they would be totally nuts not to jump in screaming!

I think we are missing something here. I would be keen to see what it is. Any thoughts ?

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Bas
While I can't verify those cost details and they may only for the reactor itself (and not the associated plant), I can explain why LNC hasn't "jumped in screaming" as you put it before.

1. To date LNC hasn't been able to start up commercial operations at Chinchilla because of State Govt restrictions. Hopefully this will change in the short term with the new LNP Government. Their big hope in Sth Aust for start up UCG and subsequent GTL (in Walloway Basin) is currently considered unsuitable for UCG because of possible subsidence (LNC's term being "under technical review").

2. The Velocys GTL unit is new technology because of its microprocessing operation, and has only just come on the market. LNC has bought the 1st commercial unit in Jan 2012. This is why the current trial at Chinchilla with the Velocys 25bopd unit is crucial to their ongoing plans, particularily in China (Inner Mongolia). Refer here for explanation of Microchannel Reactors including photos-

http://www.velocys.com/ocge02.php

3. For reference I quote the Velocys announcement of 24/5/12 below-

"24th May 2012

Successful Start-up of Commercial Scale FT Reactor

Oxford Catalysts Group PLC, the leading technology innovator for synthetic fuels production, is pleased to announce the successful start-up of a commercial scale Fischer-Tropsch (“FT”) reactor at a client facility, with performance matching expectations.

This is the Group’s first ever start-up of a commercial scale FT unit (with a nominal capacity of over 25 bpd). It is being operated by an integrated energy company, at their facility, to provide detailed engineering information for the design of commercial synthetic fuels plants. Construction and operation of such medium scale modular facilities at sites around the world is a central part of the customer’s strategy. The reactor is expected to operate for three to six months.

The Group announced the sale of this reactor on 9th January 2012. The short time from sale to start-up was a result of close collaboration between the Group and its client, as well as the client having an existing facility into which the reactor could be easily integrated.

Roy Lipski, CEO of Oxford Catalysts Group said:

“This is a true milestone for the Group and our client. We’re excited to prove the capabilities of our technology at this commercially significant scale, and are confident that it will meet our customer’s needs and facilitate their ambitious plans for widespread commercial synthetic fuels production.”

- Ends -
http://www.velocys.com/financial/fa/ocgfa20120524.php

Further information on the Velocys GTL plant-

Microchannel reactors hold the promise of improved productivity and cost effectiveness at scales far smaller than what is possible with conventional technology. However, before they are widely accepted many operational issues need to be addressed, including commercial methods for loading and unloading catalyst. This challenge was accepted by Mourik, a worldwide leader in catalyst handling, that worked closely with Velocys Inc. to develop equipment and methods that were used to successfully load a commercial scale microchannel Fischer-Tropsch (FT) reactor.
On the surface conventional tubular reactors, such as the 1,200-ton FT reactors in Shell’s Pearl plant in Qatar, may seem to have little in common with microchannel reactors developed by Velocys, a member of Oxford Catalysts Group. But what the two have in common is that both are essentially fixed bed systems ”” one with thousands of 30-feetlong (10 meters), one-inch tubes and the other with thousands of passages with far smaller dimensions and lengths (2 feet or 60 centimeters). Mourik possesses deep experience with loading catalyst in tubular reactors ”” and this explains why Shell, Velocys and many others turned to it for catalyst handling solutions.
In order to achieve maximum productivity, catalyst must be loaded uniformly throughout a reactor. The aim is to achieve the same pressure drop ”” a measure of packing density ”” in each tube or bank of microchannels.

Although in practice it is not possible to achieve perfect uniformity, Mourik’s technology and experience has allowed it to achieve loadings close to this ideal specification in reactors containing up to 30,000 tubes, but could it be done in tens of thousands of microchannels? Loading catalyst into microchannel reactors poses new challenges. While catalyst particles used in tubular reactors are pellets, with diameters about one-eighth to one-quarter inches (3 to 6 millimeters), the catalyst for microchannels is a powder, with 200-500 micron grain sizes. Loading powdered catalyst into thousands of microchannels in each reactor and ensuring each is filled to the same volume required a novel solution. To accomplish this, Mourik modified commercially available equipment and with Velocys developed an innovative catalyst loading procedure.
The resulting approach included a novel apparatus, with a built-in source of vibration. A mechanism feeds catalyst into all the microchannels at once, then the reactor is vibrated to ensure as much catalyst as possible is packed into each channel. Afterward, relatively standard methods were used to measure catalyst volumes and pressure drops to verify that the reactor is uniformly loaded. At the end of life, a similar method is used to remove the catalyst.
“We are very pleased with the equipment and methods developed by Mourik as well as the catalyst loading they achieved,” said Dave Kilanowski, senior project leader of Velocys. “As is the case with any new procedure, there are still improvements to be made, but we are confident that we are working with the right partner to figure these out.” For more information about Mourik LP, visit www.mourik-usa.com or call(281) 479-4449. For more informationabout Velocys Inc., visit www.velocys.com or call (614) 733-3300. •

http://www.velocys.com/press/egs/BIC_March_2012_Velocys.pdf

Mickel thanks for your insight and research.

I suppose to summarise the Velocys microchannel reactors look promising but are not yet commercially complete.

I have to say still think a $10m plant producing 2500 BOPD seems too cheap - but I agree there may well be other ancillary equipment that is not included in the capex. But in any case the first plant in China will have the CAPEX paid by GCL

Still leaves us wondering when the deal with GCL will be signed off.

basilio said:

Still leaves us wondering when the deal with GCL will be signed off.

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Well, my thoughts are that November 23rd is the six month date of the in-line test for the FT reactor at Lincs GTL plant. The AGM is on the 29th of Nov. So you would have to think that late November sounds good if you subscribe to the theory that it’s the tech holding things up.

More good news from AFC Energy-

Latest Independent Technology Review Highlights Progress at AFC

September 10, 2012

The key highlights identified in the report reiterate AFC Energy’s own announcements on progress, stating that AFC Energy has:

•Completed its Beta cartridge test programmes at Dunsfold and Bitterfeld;
•Completed development of the Beta+ cartridge technology;
•Established three operational demonstration systems based on the Beta+ technology;
•Created a dedicated production facility and a team that has already produced cartridges that are currently under long-term test;
•Developed these systems to the point at which they can be interrogated and operated (started/stopped) with ease, even from a remote location;
•Supported successful operation of three Beta+ systems simultaneously;
•Run the Beta+ demonstration systems for a combined total of several thousand hours; and
•Continued to build a very strong relationship with its first key customer, AkzoNobel

http://www.afcenergy.com/regulatory...technology-review-highlights-progress-at-afc/

Hopefully LNC will explain their plans with AFC Energy at the forthcoming AGM.

The news from AFC is very good. I keep wondering how/when/where LNC is going to integrate its UCG capacity to use this technology. They havn't really given any indication of their intentions in this area.

Of course another possibility is that AFC takes off and LNC goes along for the ride with its 12% stake.

Some big movement in LNC today. Almost 6m shares changing hands and currently 12% increase in SP.

One piece of significant news was the opening of the first AFC fuel cell production line. LNC has 12% of AFC and would be one of partners in using the fuel cells for CO2 free production of electricity from its UCG technology

http://www.iii.co.uk/investment/detail?code=cotn:AFC.L&display=news&it=le

I was overseas at the time of the 2011 AGM and only caught up with the video of it that was posted on the LNC site.

I have now learned that the BRR recording below of the AGM has a link to the slides in the bottom left hand corner "Download Slides (5.3 mb)". It has 53 slides- not 38 on the LNC site- and the last 15 slides reveal the Velocys and AFR plans by LNC. Not sure why they wern't included on the LNC site (apparently the audio was also cut short), perhaps it was meant to be confidential at that time (and remain confidential stil today).

The slide on page 46 is very interesting as it outlines plans by LNC to combine both the Velocys GTL plant with the AFC unit to produce both power and diesel/jet fuel from UCG. Also mentioned is PowerHouse Energy in which LNC has a 10 % stake.

Hopefully LNC will reveal all before the 2012 AGM.


http://www.brrmedia.com/event/frame/89774

While it is only one part of LNCs interest the current movement in AFC Fuel Cells deserves a focus.

Latest news is that the Russian Billionaire Roman Abramovich has bought a 15% stake in the company as it prepares to begin a range of commercialization opportunities. This technology fits neatly into LNCs UCG plans and we should expect that at least one of the developments will be with LNC if only to demonstrate the capacities of the system.

In particular it would be an excellent candidate for the clean energy fund established by the current government.

AFC shares have jumped sharply and they now have sufficient cash to see them through the first commercial installations.

The AFC fuel cell techology could well be Microsoft in a garage. It is very cheap and within a couple of years will be directly cost competitive with traditional coal fired power stations - without the pollution.

http://www.ft.com/cms/s/0/07f0d1be-13b7-11e2-9ac6-00144feabdc0.html#axzz292Wum1iG

It's very interesting to see what is happening with AFC energy at the moment.

Only 2 weeks ago the Russian Billionaire Roman Abramovich bought a 15% stake in AFC at 26p a share. The current SP is now over 50p and still climbing. The current AFC shareprice is now higher than LNC's which, when it bought its interest a couple of years ago was seen as the big international company becoming involved in a small technology start up company.

From all indications there should be an imminent announcement from AFC about the first commercial sales of its fuel cells. They have been successfully operating for over 6 months now at AkzoNobel. In that time the technology has been upgraded and small problems have been addressed. The initial production plant has been opened. One would fervently hope that a similar trial was running at LNC's operation in Chinchilla.

At some stage I believe the success of AFC's fuel cell and the opportunity for LNC to commercialize it has to come to the attention of analysts.

basilio said:

It's very interesting to see what is happening with AFC energy at the moment.

Only 2 weeks ago the Russian Billionaire Roman Abramovich bought a 15% stake in AFC at 26p a share. The current SP is now over 50p and still climbing. The current AFC shareprice is now higher than LNC's which, when it bought its interest a couple of years ago was seen as the big international company becoming involved in a small technology start up company.

From all indications there should be an imminent announcement from AFC about the first commercial sales of its fuel cells. They have been successfully operating for over 6 months now at AkzoNobel. In that time the technology has been upgraded and small problems have been addressed. The initial production plant has been opened. One would fervently hope that a similar trial was running at LNC's operation in Chinchilla.

At some stage I believe the success of AFC's fuel cell and the opportunity for LNC to commercialize it has to come to the attention of analysts.

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I wonder when AFC will make an offer for either Linc energy, or Chelsea football club
On a serious note, Linc seems to be going nowhere fast.
I'm wondering if the SP will head south from here as coal prices decrease.
If the SP hits 50c, I will consider getting back in.
Good luck with AFC and Linc Basilo.

Re: LNC - Linc Energy Commitment

Someone needs to ask Pete what he has done with EHS issues in Chinchilla and US Oil and Gas? I would be more worried about major environmental issues and Regulators than BP if I were owning the US properties. That is a train wreck and the management team there is inadequate especially when it comes to personnel and compliance. By the way, what ever happened to their CFO and their GM of EHS in Brisbane? Poof, they are gone. Maybe they knew too much.

Re: LNC - Linc Energy Commitment

Rainbow54 said:

Someone needs to ask Pete what he has done with EHS issues in Chinchilla and US Oil and Gas? I would be more worried about major environmental issues and Regulators than BP if I were owning the US properties. That is a train wreck and the management team there is inadequate especially when it comes to personnel and compliance. By the way, what ever happened to their CFO and their GM of EHS in Brisbane? Poof, they are gone. Maybe they knew too much.

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Hello rainbow. You sound as if you have some grievances???? Care to share, or am I reading too much into your post?

(Currently not a LNC share holder)

One thing I can say for sure...that is I have found it unprofitable to maintain investments in companies where the management fails to meet announced expectations.

If this happens TWICE I usually sell.

So you can only imagine how long ago I sold LNC.

Re: LNC - Linc Energy Commitment

dogeatdog said:

Hello rainbow. You sound as if you have some grievances???? Care to share, or am I reading too much into your post?

(Currently not a LNC share holder)

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I think there is a lot of unclear issues regarding the acquisition on the gulf coast. Many employees have grievances and legitimate EHS concerns that are being ignored. Look into TNRCC and OSHA complaints dating back to ERG. linc assumed those issues.m The company is under the watchful eye of several regulators related to permitting issues as well as ancient equipment that is not receiving attention. As for bpd, don't be fooled. They have contractors that are costing them far more than they are bringing out of the ground. As for Alaska, I don't get it at all. How is funding this office profitable. Moat is a great unknown or others would have been all over it.

I also question this Wyoming UCG project which has been proposed for years now with continual excuses related to permit approvals. Perhaps the Sierra club has had an impact or the wrong guy is running the show up there. Regardless Wyoming politics are not the same as Queensland. They have zero qualified staff to manage HR, EHS, Finance, and Land services in the US. Laid off most of the Denver office and are leasing the lavish leases they signed in the heart of Denver. I also heard they made a huge lease commitment in Houston and Baton Rouge which has since been closed. I am a US investor who was sold a bill of goods and cannot let go of my painful losses. Diesel dash is a joke. UCG in the US is a farce with this crew. I hear they have only lawyers on board in Denver and the Houston office is being led by a couple of cronies with no ability to manage a team.

I am afraid Pete's ego is over the top. Only the best offices worldwide but no money coming in to support. This results in places like Casper losing great people. Schofield failed in the US so they shipped him to SAPEX? China is another drawn out joke. I just wish he would take his ego and money and move on. Who is Ken Dark and what qualifies him to be a leader? Where is a US President? Rohner left as CFO very quietly and Chinchilla continues this commercial pipe dream. Get out now if you are in.

Re: LNC - Linc Energy Commitment

Rainbow54 said:

I think there is a lot of unclear issues regarding the acquisition on the gulf coast. Many employees have grievances and legitimate EHS concerns that are being ignored. Look into TNRCC and OSHA complaints dating back to ERG. linc assumed those issues.m The company is under the watchful eye of several regulators related to permitting issues as well as ancient equipment that is not receiving attention. As for bpd, don't be fooled. They have contractors that are costing them far more than they are bringing out of the ground. As for Alaska, I don't get it at all. How is funding this office profitable. Moat is a great unknown or others would have been all over it.

I also question this Wyoming UCG project which has been proposed for years now with continual excuses related to permit approvals. Perhaps the Sierra club has had an impact or the wrong guy is running the show up there. Regardless Wyoming politics are not the same as Queensland. They have zero qualified staff to manage HR, EHS, Finance, and Land services in the US. Laid off most of the Denver office and are leasing the lavish leases they signed in the heart of Denver. I also heard they made a huge lease commitment in Houston and Baton Rouge which has since been closed. I am a US investor who was sold a bill of goods and cannot let go of my painful losses. Diesel dash is a joke. UCG in the US is a farce with this crew. I hear they have only lawyers on board in Denver and the Houston office is being led by a couple of cronies with no ability to manage a team.

I am afraid Pete's ego is over the top. Only the best offices worldwide but no money coming in to support. This results in places like Casper losing great people. Schofield failed in the US so they shipped him to SAPEX? China is another drawn out joke. I just wish he would take his ego and money and move on. Who is Ken Dark and what qualifies him to be a leader? Where is a US President? Rohner left as CFO very quietly and Chinchilla continues this commercial pipe dream. Get out now if you are in.

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Hello Rainbow, and thank you for your comments.

I've made a tidy profit from owning Linc shares in the past, including a sizable dividend payout following the Adani deal, so I'm grateful of what PB/Linc have achieved historically.
Of course, the past is the past, and I've concluded that PB is "almost" a master of spin.

I currently have no vested interest, but still believe the company has potential.
The investment in UK based AFC appears to be a wise one, and should benefit Linc's desire to produce "clean" energy once both AFC's fuel cell, and LNC's technologies have been perfected.

Linc's foray into O & G leaves me mystified to be honest.

Rainbow... your obviously disgruntled, but are you able to display links or factual evidence regarding your allegations mentioned above? I am genuinely interested in what you have highlighted.

Looks like the stock is really tanking. Any news from LNC on what's going on or is this still fallout / market reaction to the USD265 million Bond Issue? The AGM this year is going to be interesting.

johnpw said:

Looks like the stock is really tanking. Any news from LNC on what's going on or is this still fallout / market reaction to the USD265 million Bond Issue? The AGM this year is going to be interesting.

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I'm in no doubt MR Bond, not James Bond, will come up with some wonderful spin.
I'll will be tempted however, to buy in around 50c and hold.

That September report is disappointing. It's seems clear that the intentions to get to 6000 BPD oil production by the end of the year are fanciful. There is just too much ground to be made up in the next couple of months for that to happen.

A significant shortfall there means LNC will not be making enough coin from their oil production to break even by June 2013. More negative financing.

Six months after the initial announcement there is still no certainty about the GCL deal. Again with no money coming in finances will be tight.

Clearly there are lots of projects that "might" be sold, "could" be developed. But these stories have been running for four years now and we have only see one major tick - the Adani coal sale.

Its not good enough.

basilio said:

That September report is disappointing. It's seems clear that the intentions to get to 6000 BPD oil production by the end of the year are fanciful. There is just too much ground to be made up in the next couple of months for that to happen.

A significant shortfall there means LNC will not be making enough coin from their oil production to break even by June 2013. More negative financing.

Six months after the initial announcement there is still no certainty about the GCL deal. Again with no money coming in finances will be tight.

Clearly there are lots of projects that "might" be sold, "could" be developed. But these stories have been running for four years now and we have only see one major tick - the Adani coal sale.

Its not good enough.

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Well said Basilio.
Having just browsed the latest Quarterly Activities and Cashflow Report, it paints a picture of optimism, typical of PB.
It points to a great deal of information regarding projects, happening by the end of 2012, in addition to other projects being way out there in the future.
With the cash flow burn at current levels, I fear the SP will continue to head south.
This company has to be a speculative buy, but not for the faint hearted.

(Currently not a share holder)