(EnergyAsia, July 7 2011, Thursday) — Central Petroleum Limited and Allied Resource Partners Pty Ltd (ARP) said they have agreed to jointly develop a clean fuel production project that will draw on a recently discovered “very large” coal field in central Australia.

The Pedirka Basin in the arid Simpson Desert in south east Northern Territory and northern South Australia is estimated to hold “thousands of billions of tonnes” of mineable coal, said the two Australian firms in a joint statement.

Their proposal for the A$7.5billion Pedirka Basin Clean Fuel Production Project includes producing underground coal gas (UCG) and gas-to-liquids (GTL) from the vast stranded coal deposits, converting these coal deposits into ultra clean liquid fuels, and capturing and storing carbon dioxide underground. (US$1=A$0.93).

In the A$7.5 billion first stage of construction, the project is envisaged to produce a minimum 60,000 b/d of fuel to be piped to Darwin for use in domestic markets and for export. It will generate long-term revenue of over A$6 million per day, and create up to 3,000 jobs during construction and 1,500 jobs when operational.

The partners said these projects, in turn, will create an economically and environmentally sustainable industry in central Australia, generate infrastructure, investment and jobs, and help secure Australia’s energy supply, with the potential to generate significant export revenue.

The partners have started the search for A$300 million in funding and technology partners for a bankable feasibility study (BFS) from major global and Australian sources. Funders will be asked to formally respond to a Request for Proposal (RFP) process in the second half of 2011.

The BFS will include an intensive exploration programme, UCG / GTL demonstration plant and trials, obtaining government licences and approvals processes, and engineering, procurement, construction management (EPCM).

David Shearwood, ARP co-managing director, said:

“The global RFP process will attract a large number of potential project partners and consortia because the proposed project is world class in size, expected profitability and environmentally because it is a giant leap towards lower emission fuel. It has the potential to be expanded many fold with enormous benefits to government, regional economies, Indigenous communities and Australia’s long term oil self sufficiency.”

CTP is an ASX-listed junior exploration and production company operating the largest holding of prospective onshore acreage in Australia totalling over 270,000 sq km.