(EnergyAsia, November 1 2012, Wednesday) — Australia-listed Cougar Energy said it recently signed a memorandum of understanding (MOU) with Hulaan Coal Corp with the view to studying the potential of the Mongolia-focused miner’s coal assets for gasification development.

Canadian-owned Hulaan owns a broad portfolio of thermal and potential coking coal assets in the landlocked Asian country.

Cougar Energy CEO and managing director Rob Neill said the MOU will allow his company to undertake due diligence on Hulaan’s coal resources and those under its direct management in Mongolia, and assess their potential for underground coal gasification (UCG) development.

Cougar Energy had already undertaken a preliminary review of two coal areas with a combined resource in excess of 500 million tonnes of thermal coal.

“Once a suitable coal resource is identified, we will negotiate the terms under which a subsequent UCG project could be developed. We have already discussed a broad outline of such terms and look forward to a long and prosperous relationship with Hulaan,” Mr Neill said.

“Much of this coal is deeper than 150 metres and subject to further analysis, is likely to be suitable for UCG.”

When that is determined, he said the gas could be used to support the development of both small and large scale power projects for either regional use or for transmission to the Mongolian capital of Ulaanbaatar. The gas could also be converted into compressed synthetic natural gas for domestic use.

“This also has significant environmental benefits as it would replace the current burning of coal, and help in reducing the current pollution problems around the capital city,” Mr Neill said.

“Mongolia is deficient in the local production of oil and gas, relying heavily on imported fuels from China and Russia, hence the conversion of UCG synthetic gas or syngas into transport fuels, is a significant longer term objective.”

The MOU with Hulaan forms part of Cougar Energy’s long term plans for commercial development of UCG projects across Asia.

Following the recent national election in Mongolia, Cougar Energy will resume its dialogue with the Mongolian government to discuss regulatory controls relevant to the development and introduction of UCG technology, and to seek out new opportunities for the development of coal areas not suitable for conventional mining operations.

As part of its Asia strategy, Cougar Energy is also looking to develop projects in Indonesia and China and work with financial associations in Singapore and Hong Kong.