Cluff Resources and Wales UCG scoping study

Paul Mobbs mobbsey at
Mon Feb 25 20:36:21 GMT 2013

As I keep saying, but no one seems to be really with it on this one --
Underground Coal Gasification, UCG... these are the people who mean
business... big business!

The potential energy and thus economic return on investment for UCG is
higher than fracking, but at the same time the pollution potential is
also very much higher 

So, what are we going to do about this?


BTW: Anyone who wonders on the graceful symmetry of that "E=mc2"
equation -- that is, "Energy" is equivalent to the amount of "money"
multiplied by the amount of "crap created" -- really should have a read
'Limits to Growth' and 'The Entropy Law and the Economic Process'.


Company Q&A: Cluff Natural Resources to begin UCG scoping study 'very

Proactive Investors, 18th Feb 2013

Cluff Natural Resources (LON:CLNR) made a breakthrough last month with
the acquisition of its first projects, though the fact that it was for
unconventional hydrocarbon assets in the UK was a surprise.

It was awarded two licences for underground coal gasification (UCG)
covering 111 hectares of Carmarthenshire and the Dee Estuary, on the
North Wales/Merseyside border.

The UCG process uses directional drilling techniques that are
commonplace in the oil and gas sector to follow the coal seam. But
crucially it doesn’t involve deploying the fracking technology that has
been vilified despite transforming the US gas industry.

The UK resource suitable for deep seam UCG is estimated at 17 billion
tonnes, or 300 years' supply at current consumption, according to a
Department of Trade & Industry report.

Anna Obolenskaya, CNR’s chief financial officer and head of business
development, explains the plans for the projects and the group.

Proactive: Last month you secured new UK licences for underground coal
gasification, what progress has been made with these projects since?

AO: At the moment we are putting a team of specialists together to start
the scoping study. We are talking to experts in the area. And at the
moment we think it is important to define the parameters and objectives
of the study before we engage with these experts.

We think we’ll start the study very soon and the timeline of the study
is likely to be between six and twelve months.

Proactive: UCG projects are quite large and costly, will CNR be able to
secure sufficient funding?

AO: It is important to appreciate that there limited amount of
information in the public domain about UCG projects. Many of the numbers
people often quote are not really comparable to what CNR is planning to

It is important that investors understand that UCG is really is all
about technology, specifically about the chemistry of getting the gas
out of the coal. Also the geological controls and properties of the coal
are important.

So when people start to compare our projects in the UK with other UCG
operations, in Australia and the United States, really these assets
aren’t directly comparable.

And in reference to funding, what we are doing now is starting the
scoping study. We will not need any additional funds to do that and at
the end of this process the situation will be much clearer regarding the
course of the project.

Proactive: What about the technical risks of UCG?

AO: There is a good understanding of UK coal geology. And there are
several UCG extraction technologies that can be applied. We are working
through the potential options in a sensible and logical manner, and for
now we don’t want to put any information out there which could be
misleading for investors.

We will wait until we have something tangible to say.

Proactive: The fact that CNR is now focussed on UCG as its main asset
was not necessarily what some investors were expecting. What would you
say to those investors?

AO: This is currently our only asset. But we are currently assessing
several attractive opportunities.

The reason we moved into UCG was because we see it as a potential ‘game
changer’ in the long term and because we saw an opportunity to acquire
new projects at a low entry cost.

Proactive: The implantation of UCG projects will take several years,
therefore some investors are concerned about a lack of catalysts in the
short term. What would you say to those investors?

AO: Share price movements are all about speculation and obviously we
can’t make promises about share price increases in the future. The
market is driven by greed and fear. We certainly aren’t greedy and Mr
Cluff is fearless.

UCG, like any other mineral project, carries something of a high risk
but at the same time it could be very high return.

Proactive: You are still looking at other deals and potential
acquisitions. What progress are you making?

AO: We have a few opportunities that have progressed more than others.
We have two projects that are at a more advanced stage of discussions,
and we have a team going out to Africa next week to carry out some due

We don’t have any commitments at this stage. And any project has to meet
our stringent criteria. I think everybody is aware that we were looking
at several projects last summer and over the autumn, but they failed our
due diligence process. We won’t just do a deal for the sake of it. It
has to be the right deal for both CNR and its shareholders.

I think a lot of people may not appreciate the sheer number of projects
that are out there. During the natural resources boom there was a lot of
land grabbing and now there are companies with assets but without cash,
proper management teams or both.

We are in quiet a strong position really. A lot of people come to us
with opportunities. Chris Schikaneder, our newly appointed business
development analyst, has an in-tray the size of Tolstoy’s novels. We
have a lot of opportunities and we are assessing them.


"We are not for names, nor men, nor titles of Government,
nor are we for this party nor against the other but we are
for justice and mercy and truth and peace and true freedom,
that these may be exalted in our nation, and that goodness,
righteousness, meekness, temperance, peace and unity with
God, and with one another, that these things may abound."
(Edward Burrough, 1659 - from 'Quaker Faith and Practice')

Paul Mobbs, Mobbs' Environmental Investigations
3 Grosvenor Road, Banbury OX16 5HN, England
tel./fax (+44/0)1295 261864
email - mobbsey at
website -
public key -

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