Cougar Energy scores A$8M for underground coal gasification

Melbourne, Australia's Cougar Energy (ASX:CXY) said today a new private placement will allow it to finish construction and launch pre-production operations of a project in Queensland, Australia, using underground coal gasification (UCG) technology.

The Kingaroy UCG project is expected to provide samples for testing to prove the technology works at commercial scale. Cougar Energy is designing its first commercial facility, the Kingaroy Power Plant, at the same site.

Cougar is also developing a potential UCG project in the Gippsland Basin in Victoria with Ignite Energy Resources.

Cougar Energy closed on A$8.29 million (US$7.16 million) in a private placement from institutional investors in Australia and the United States last week, representing the first time international investors have participated. In addition, the company announced today its first share purchase plan to raise up to A$6 million.

The new capital is also expected to fund its drilling programs at other project sites.

Coal fuels about half of U.S. electricity production and provides about a quarter of its energy. More than 60 percent of coal mined in the U.S. is dug from the surface, a process highly criticized for its environmental impact (see Top U.S. bank phases out loans to dirty coal). However, companies are developing processes based on UCG to leave many of the contaminants from typical mining operations underground, preventing their release in the atmosphere.

Cougar Energy's UCG technology converts coal in-situ into a gas that's used as a fuel for baseload power generation. The gas can also be converted into petrochemical products or liquids.

In December, Colorado-based Luca Technologies raised $75.9 million in a Series C round for its underground coal-gasification technology using micro-organisms to revive old coal seams and natural gas wells (see Luca gets $76M for coal gasification). The same month, U.S.-based Laurus Energy came out of stealth with $8.5 million in financing (see Laurus Energy finds clean coal solution?).

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