Carbon Energy Limited - Bloodwood Creek Environmental Update

09:22 AEST Jan 31, 2011 ABN Newswire (C) 2004-2011 Asia Business News PL. All Rights Reserved.

Brisbane, Australia (ABN Newswire) - Carbon Energy Limited (ASX: CNX) (PINK: CNXAF) advises that it has received a notice from the Queensland Department of Environment and Resource Management (DERM) extending the date for a final decision on the Company's amended Environmental Authorities to 11 February 2011.

In November 2010 the Company announced that DERM accepted the Company's environmental report as addressing the requirements of the Environmental Evaluation notice issued on 21 July 2010 and additional information notice issued on 21 September 2010.

During the evaluation phase and subsequently, DERM has indicated that the independent Scientific Expert Panel advising DERM on Underground Coal Gasification has not identified any concerns or issues with respect to the Company's evaluation.

In a statement on Friday 28 January 2011, the Minister for Climate Change and Sustainability, Kate Jones MP, made comment on Carbon Energy's evaluation process into a release of process water to land at the site. The Minister stated that 'while investigations indicate no ongoing environmental harm has occurred, these investigations will continue into the cause of this incident.'

It is worth noting that the 'process water' described above relates to containment of surface water on site, a common situation faced by many industries and not specifically Underground Coal Gasification (UCG), and at no time were underground activities or groundwater impacted by the incident.

It is anticipated that once DERM's investigations are complete and revised environmental conditions are finalised, a notice will be issued to Carbon Energy enabling the Company to proceed with the initiation of UCG Panel 2 to enable commencement of syngas production.

The Company also notes recent media commentary referencing unsubstantiated accusations by a former employee of Carbon Energy, Mr John Wedgwood, regarding environmental compliance at the Company's site.

Mr Wedgwood was suspended by the Company in May 2010, pending the outcome of an internal audit into alleged misconduct (Mr Wedgwood resigned prior to the completion of the audit process). In August 2010 the Company announced that it had commenced legal proceedings in the Supreme Court of Queensland against Mr Wedgwood and Alexware Consulting Pty Ltd trading as Pangea Partners International, the contractor originally engaged to build and commission the Company's 5 MW power station. Throughout his employment Mr Wedgwood was responsible for the Company's environmental compliance.

As the action between the Company and Mr Wedgwood remains before the courts the Company cannot make any comments on the issue or the allegations made by Mr Wedgwood. However, the Company will not be dissuaded from pursuing any action it feels is appropriate to protect the interests of shareholders and the Company.

The Company continues to work cooperatively with DERM while it continues its' investigations and follows due process in an effort to expedite final approvals to ensure that UCG Panel 2 can be commissioned as soon as practicable.

Carbon Energy's is committed to superior environmental management practices and is confident in the integrity of the environmental systems and processes that the Company has instituted. The Board has demanded that the best possible standards be applied.

Carbon Energy anticipates that in the very near future the necessary approvals will be forthcoming to advance the development of its project for the benefit of all stakeholders, including shareholders and the state of Queensland.


About Carbon Energy Limited:

Carbon Energy's purpose is to produce clean energy and chemicals feedstock from Underground Coal Gasification (UCG) syngas.

Carbon Energy's unique approach to UCG and syngas production produces a low cost option for capturing CO2 making it a leader in clean coal technology.
Carbon Energy's ambition is for syngas to become the preferred feedstock for producing clean coal power stations, an alternative to oil-based fuel, agribusiness products (fertilisers and explosives), polyolefin products (such as plastics) and allowing for economic carbon capture.

Carbon Energy's technological advantage comes from its association with CSIRO including world class geotechnical, hydrological and gasification modelling capabilities.

Carbon Energy is building an international portfolio of coal assets, suitable for UCG with close proximity to markets.



Contact:

Andrew Dash
Managing Director
Carbon Energy Limited
Tel: +61-7-3337-9944
Fax: +61-7-3337-9944
http://www.carbonenergy.com.au