The FuturGas project involves CTL gasification and integrated electricity generation, and will evaluate carbon and storage technology from a large 578 million tonne coal resource.

Strike said stage one involves completing the pre-feasibility study by the end of the first quarter of 2009, completing gasification testing and entering into technology and off-take agreements by the second quarter of 2010.

Stage two would see Hybrid complete the bankable feasibility study including pilot testing, initial liquids production and electricity generation by 2012.

Stage one is expected to cost $15 million and stage two $50 million.

According to Strike, the strong market demand for cost-effective quality liquid fuels and electricity to meet Australia's growing demand for power provides an opportunity to negotiate favourable arrangements with industry players and investors in the next 12 months.

"CTL projects have now come to the forefront in Australia due to the rapidly diminishing domestic oil production coupled with the very large increases in oil price. The FuturGas project is ideally positioned to help reduce Australia's growing dependency on imported liquid fuels," Strike managing director Simon Ashton said.

He added that Prime Minister Kevin Rudd and Minister for Resources and Energy Martin Ferguson openly recognised and encouraged the potential of CTL.

Strike also said the project is expected to produce 10,000 barrels of liquid fuels and 40MW of electricity per day, and to generate annual revenues of around $450 million.

Plans for the FuturGas project were first announced in late 2007.