CIC Energy Announces Positive Results of Feasibility Studies and Technology Agreement with Shell on Coal-to-Hydrocarbons Project



    Shell's gasification technology is well suited for coal from Mmamabula

    TSX:ELC
    BSE:CIC ENERGY

    ROAD TOWN, TORTOLA, British Virgin Islands, Aug. 5 /CNW/ - CIC Energy
Corp. ("CIC Energy" or the "Company") (TSX:ELC, BSE: CIC Energy) today is
pleased to announce positive results from feasibility studies on the Company's
planned Coal-to-Hydrocarbons ("CTH") Project. The Company also announces the
signing of an agreement with Royal Dutch Shell plc ("Shell") for the option to
acquire a license for Shell's coal gasification technology for the CTH
Project. In addition, an update is provided on the CIC Energy's power project,
the Mmamabula Energy Project.

    Jacobs Feasibility Study

    It is anticipated that the CTH Project will convert coal at the Mmamabula
Coal Field to fuels and petrochemicals by first gasifying the coal. The
purpose of the independent feasibility study conducted by Jacobs Engineering
Group Inc., ("Jacobs") for the CTH Project was to develop and evaluate viable
CTH Project alternatives as well as provide technical and cost estimates. This
was done while maintaining maximum design flexibility pending the outcome of
the previously announced in-depth value-chain study discussed in more detail
below.
    Three possible CTH Project alternatives were evaluated by Jacobs, all of
which included an upstream coal gasification island to produce synthesis gas
("syngas") with different combinations of downstream processes to make fuels
and petrochemicals. The Jacobs feasibility study concluded that the coal from
the Mmamabula Coal Field was entirely suitable for the production of synthesis
gas ("syngas") using either the Shell or the Siemens gasification technologies
that were evaluated.
    "The very encouraging results of the feasibility study by Jacobs on the
Coal-to-Hydrocarbons Project provide a strong foundation to advance this
project toward initial commercial operations in 2014," said Mr. Greg Kinross,
President of CIC Energy. "Now we can work towards finalization of a bankable
feasibility study for the CTH Project, once the environmental impact
assessment work and value-chain study are completed. This work will occur in
parallel with discussions with potential investment partners and product
offtakers for the CTH Project."
    The base case (Alternative 1) of the Jacobs study was to convert the
syngas to methanol and then to gasoline and dimethyl-ether ("DME"). DME is
being considered for future use as a fuel substitute for diesel for use in
power plants and as a transportation fuel or as a fuel additive. Alternative 2
of the Jacobs study was a smaller operation that would produce gasoline. The
potential product slate evaluated as part of the Jacobs study for the CTH
Project was selected based on the availability of commercially proven
technology, as well as previous pre-feasibility stage market research studies
that were conducted for CIC Energy by Wood Mackenzie.

    
    -------------------------------------------------------------------------
             Jacobs Feasibility Study - CTH Project Alternatives
    -------------------------------------------------------------------------
    Alternative 1   Coal  syngas   2 methanol plants    gasoline & DME
    -------------------------------------------------------------------------
    Alternative 2   Coal  syngas   1 methanol plant     gasoline
    -------------------------------------------------------------------------
    Alternative 3   Coal  syngas   2 methanol plants    methanol pipeline
                                                         to South Africa
    -------------------------------------------------------------------------

    -   Alternative 1 would involve two 44,000 barrels per day ("bbl/day")
        methanol plants, totaling 88,000 bbl/day or 10,000 tons per day
        ("tpd"), whereby the output from one methanol plant would be
        converted to 16,250 bbl/day gasoline and the output from the second
        methanol plant would be converted to 3,570 tpd DME. 245 tpd of
        liquefied petroleum gas ("LPG") would be produced as a by-product.

    -   Alternative 2 would involve a 44,000 bbl/day (5,000 tpd) methanol
        plant, whereby the methanol feedstock is converted downstream to
        16,250 bbl/day gasoline and as a by-product, 245 tpd of LPG would be
        produced.

    -   A further Alternative 3 was evaluated (subject to confirmation that a
        methanol offtake for gas-fired turbines is viable), and involved two
        44,000 bbl/day methanol plants (totaling 88,000 bbl/day or 10,000
        tpd) plus a pipeline for transporting the methanol to a central
        location in South Africa.
    

    For both Alternative 1 and Alternative 2, the downstream fuel products
would be supplied free on board ("FOB") at Mmamabula, Botswana, based on
strong indications of interest from major oil and gas companies.
    Estimated coal consumption for the CTH Project is in the range of
approximately 4 million tons per annum per 44,000 bbl/day methanol plant. The
Company's current mineral resource estimate for the Mmamabula Coal Field,
which is expected to be updated shortly, can accommodate the CTH Project,
along with the Company's plans for a major power station and coal exporting
business.
    The Jacobs feasibility study included a gasification technology selection
process that focused on total coal utilization, environmental friendliness,
robustness, carbon conversion efficiency and reliability, specifically for the
coal type available at the Mmamabula Coal Field. Two feasible entrained-flow
gasification technologies were selected and evaluated, namely Shell Coal
Gasification Process ("SCGP") technology and the Siemens SFG entrained flow
gasification technology.

    Technology Agreement with Shell

    Results of the Jacobs study showed Shell's coal gasification technology
to be best choice based on the factors discussed above. For this reason CIC
Energy has signed an Option Agreement with Shell, for the option to acquire a
license from Shell for their coal gasification process (SCGP) technology for
the CTH Project.
    "Shell is pleased to be engaging with CIC Energy on their opportunity to
develop the first syngas plant in Botswana," said Mr. Martin Solomon, Shell's
General Manager - Global Syngas Parks and Business Development, Africa and
Middle East.
    Shell gasifiers utilize pulverized coal fines (fine particles of coal)
which are expected to be a significant by-product of CIC Energy's planned coal
export operations. Utilization of these coal fines by the CTH Project, along
with coal not suitable for export markets, will enhance the total value
realization of the coal resource at Mmamabula.

    CTH Project - Cost Estimates

    The Jacobs feasibility study also provided cost estimates for the CTH
Project. Preliminary assessment of Engineering, Procurement and Construction
("EPC") capital costs and annual operating costs as estimated by Jacobs are
shown below in June 2008 current dollars.
    These preliminary estimates are for equipment, materials, construction
and installation costs for the coal gasification island, methanol plant(s),
and downstream DME and gasoline plants, as well as the possible methanol
pipeline in the case of Alternative 3. The EPC costs are un-escalated for
potential future price increases on equipment, engineering services, etc. and
do not include capital costs for infrastructure (electricity, water and other)
that may be required. The operating costs are also un-escalated and exclude
coal, electricity and water consumption. The Jacobs cost estimates were
commissioned to be accurate within a +/-30% range.

    
    -------------------------------------------------------------------------
                                        Estimated         Estimated Annual
                                        Capital Costs(*)  Operating Costs(*)
    -------------------------------------------------------------------------
    Alternative 1 - 10,000 tpd
     methanol                           US$4.9 billion    US$145-215 million
    -------------------------------------------------------------------------
    Alternative 2 - 5,000 tpd
     methanol                           US$2.6 billion    US$ 75-110 million
    -------------------------------------------------------------------------
    Alternative 3 - 10,000 tpd
     methanol                           US$4.5 billion    US$140-210 million
    -------------------------------------------------------------------------
    (*) June 2008 current dollar estimates as described above.
    

    Shell Value-Chain Study

    The final product slates for the CTH Project will only be determined once
the detailed value-chain study, including a comprehensive market study, is
completed in the third quarter of this year. This study is being conducted by
Shell Global Solutions International, on behalf of CIC Energy, and will
provide an independent view of the revenue potential of the CTH Project, based
on the evaluation of a full range of potential downstream products, including
those in the Jacobs study. The final product may be methanol, for use as a
combustion fuel in gas-fired power stations, or the methanol might be
converted to any combination of a range of possible fuels and petrochemicals
such as DME, gasoline, and propylene, the latter being a raw material for
industrial products as diverse as plastics, plywood, paints, explosives, and
permanent press textiles.

    Commercially Proven Technology

    The CTH Project alternatives evaluated in the Jacobs study are all based
on technology and processes that are well proven and commercialized. Syngas to
methanol technologies being considered are from JM/DPT (Johnson Matthey/Davies
Process Technology) and Lurgi's MegaMethanol technology, both of which have
numerous commercial plants operating worldwide. The methanol-to-gasoline
("MTG") conversion process would be based on ExxonMobil's proven MTG
technology, which operated successfully for over ten years in New Zealand. The
methanol-to-DME conversion process would be based on technology either from
Japan's Toyo Engineering ("Toyo") or Germany's Uhde GmbH (a division of
Thyssenkrupp Technologies), both commercially proven technologies.

    Additional Technical Studies

    The results from the two additional technical studies that were
undertaken, as previously announced, were incorporated into the Jacobs
feasibility study. These included the feasibility study related to the
manufacturing of DME as a fuel end-product by Toyo Engineering of Japan, and
the pre-feasibility study to evaluate at a multi-product pipeline from CIC
Energy's Mmamabula site to Gauteng, South Africa, by a partnership between
Lategan & Bouer and VGI. The outcomes of both of these studies were positive
and additional work is being considered.

    CTH Project Next Steps

    The major milestones for the CTH Project following completion of the
value-chain study are expected to be: identification of preferred end-products
and their associated technology solutions (2008), identification of markets
and logistical solutions (2009), selection of preferred investment partners
(2009) and completion of environmental impact assessments (2010). Initial
commercial operations are anticipated in 2014.

    Mmamabula Energy Project - Update

    CIC Energy is making substantive progress with an Asian EPC solution for
Phase One of the Mmamabula Energy Project ("MEP"). Based on recent
discussions, CIC Energy anticipates being in a position to announce the
selected EPC contractor for Phase One of the MEP power station before the end
of 2008. Phase One will be re-sized to an approximately 1,200 megawatt ("MW")
power station designed with provisions for expansion, as multiple phases are
anticipated. The 1,200 MW (net capacity) power station design is expected to
comprise of two 600 MW units. CIC Energy continues to anticipate that Phase
One of the MEP will be in commercial operation in late 2012 or early 2013.

    About CIC Energy Corp.

    CIC Energy is a TSX/BSE-listed company engaged in the advancement of the
Mmamabula Energy Complex in Botswana, Africa. This planned Complex consists of
the Mmamabula Energy Project, the Coal-to-Hydrocarbons Project and the Export
Coal Project. The Mmamabula Energy Project is envisaged as a power station and
integrated coal mine project. The Coal-to-Hydrocarbons Project is intended to
produce syngas from coal which can be converted to a variety of downstream
products, including fuels and petrochemicals. The planned Export Coal Project
is actively investigating ways to export A grade thermal coal from the
Mmamabula Coal Field.
    CIC Energy has a treasury of approximately C$100 million.

    About Jacobs

    Jacobs (NYSE:  JCE) is one of the world's largest and most diverse
providers of professional technical services with annual revenues exceeding
US $8 billion. Jacobs has extensive experience in applying gasification to
meet the needs of various industries and has developed proprietary technology
to improve the performance of gasification plants. Jacobs also has extensive
experience in the production of chemicals and fuels produced from syngas. For
more information on Jacobs please visit www.jacobs.com.

    Forward-Looking Statements
    This news release contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will
or may occur in the future are forward-looking statements. These
forward-looking statements reflect the current expectations or beliefs of the
Company based on information currently available to the Company. Such
forward-looking statements include, among other things, statements relating
to: the CTH Project, including the results of the Jacobs Feasibility Study,
Alternatives 1, 2 and 3, the suitability of coal from the Mmamabula Coal Field
for the production of syngas, and the suitability of Shell's gasification
technology; and the reconfigured Mmamabula Energy Project, including the
selection of an EPC contractor. Forward-looking statements are subject to
significant risks and uncertainties and other factors that could cause the
actual results to differ materially from those discussed in the
forward-looking statements, and even if such actual results are realized or
substantially realized, there can be no assurance that they will have the
expected consequences to, or effects on, the Company. Factors that could cause
actual results or events to differ materially from current expectations
include, but are not limited to: the assumptions underlying the Jacobs
Feasibility Study and/or the recommendations of such study proving to be
inaccurate or incorrect; the capital costs and operating costs of the CTH
Project varying significantly from the estimates contained in the Jacobs
Feasibility Study; failure to complete, or delays in the completion of,
positive bankable feasibility, detailed value-chain and market studies, any
requisite interim studies and environmental impact assessments on the CTH
Project; failure or delays in entering into technology, intellectual property
licensing and other agreements required to develop the CTH Project, including
a definitive license agreement with Shell in respect of the SCGP technology
and preliminary and/or definitive fixed price contracts with reputable EPC
firms; the failure to identify, or delays in the identification of, preferred
end-products and their associated technology and logistical solutions for the
CTH Project; the failure of the Company to successfully design a viable
alternative configuration of the Mmamabula Energy Project and/or failure to
complete a positive bankable feasibility study thereon; the grade, quality and
recovery of coal which is mined varying from estimates; inflation; changes in
exchange rates; the ability to raise the required debt or equity financing for
the implementation of the CTH Project and/or the reconfigured Mmamabula Energy
Project on favourable terms or at all; changes in anticipated demand for power
in southern Africa; changes in equity markets; capital and operating costs
varying significantly from estimates; environmental and safety risks,
including increased regulatory burdens; delays in the development of the CTH
Project and/or the reconfigured Mmamabula Energy Project caused by
unavailability of equipment, labour or supplies, limited capacity among EPC
firms (and resulting less attractive EPC contract terms being made available),
climatic conditions or otherwise; geological and mechanical conditions; delays
or failures in obtaining regulatory permits and/or licences (and renewals
thereof) respecting mining, the production of chemicals including syngas,
methanol, gasoline and/or DME, power generation and/or power transmission
lines and other transportation and industrial activities; the existence of
undetected or unregistered interests or claims, whether in contract or tort,
over the properties of the Company and its subsidiaries and joint venture
companies; inability to enter into power purchase agreements and/or
transmission agreements with Eskom Holdings Limited and/or Botswana Power
Corporation or other requisite agreements, including preliminary and/or
definitive fixed price contracts with reputable EPC firm(s) and other
agreements required to facilitate the development, operation and financing of
the Mmamabula Energy Project on favourable terms or at all; lack of markets
for the Company's coal resources and any products derived therefrom, including
methanol, gasoline and DME; political risks arising from operating in Africa;
or other factors (including development and operating risks). Any
forward-looking statement speaks only as of the date on which it is made and,
except as may be required by applicable securities laws, the Company disclaims
any intent or obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise. Although the
Company believes that the assumptions inherent in the forward-looking
statements are reasonable, forward-looking statements are not guarantees of
future performance and accordingly undue reliance should not be put on such
statements due to the inherent uncertainty therein.

    %SEDAR: 00023467E




For further information:

For further information: on the Company and the Mmamabula Energy
Complex, please visit CIC Energy's website at www.cicenergy.com or contact:
Erica Belling, CFA, P.Eng., VP Investor Relations, Tau Capital Corp., Tel:
(416) 361-9636 x 243, Email: ebelling@taucapital.com

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