For many years, oil has powered the successful industrialisation of western world countries. As the demand and cost of traditional oil sources rise, countries are now looking for new alternatives to fuel their economies. Underground Coal Gasification, or UCG, offers countries with coal a means to secure their own oil, and in this, their prosperity.
UCG has a long history, though one that is not widely recognised amongst mainstream energy circles and key oil and coal consuming countries. The idea of UCG can be traced back to Sir William Siemens where, in the mid-1800s, he suggested the underground gasification of waste and slack in coal mines. Further developed over subsequent decades in Russia, the first successful trials began just after the second World War. In the 1960s, fourteen UCG plants operated commercially across the Soviet Union. Today, one commercial UCG operation remains in Angren in Uzbekistan, supplying synthesis gas to the nearby power station for electricity generation.
In the more recent past, low oil prices have stunted the development of alternative energy producing technologies like UCG. Over the past few years, however, record oil prices have been experienced, changing the climate for and impact that technologies like UCG can have. The historical lack of interest in UCG hasn’t stopped one Australian company from taking the technology to the next level, and interest today now certainly seems to have risen.
“In today’s oil-hungry climate, countries are becoming more dependent on foreign oil,” says leading UCG company Linc Energy’s Chief Executive Officer Peter Bond. “Countries that are rich in coal will require other energy options, and look to UCG. UCG offers a real commercial opportunity to produce a country’s much needed electricity generation and transport fuel quantities.”
There is no doubt that there is a growing international interest in UCG. The United States, China and India are all interested in UCG and how it can play a role in securing cheaper, cleaner energy for the future. UCG is recognised as an additional and alternative energy source that produces synthesis gas for electricity generation, diesel and jet fuel production, and a host of other products like lubricants, waxes and fertilisers.
“Consider the United States; they import about 60 percent of their oil from overseas. India and China have insufficient oil producing activities. If these countries are happy to say ‘it’s covered’, and rely upon the Middle East for their energy, then they are going to have to pay a lot of money for this privilege,” says Linc Energy’s Chief Executive Officer Peter Bond.
For economic and political reasons, countries need to ensure they have an independent fuel source. Not too long ago, Russia cut off Poland’s gas supply. UCG can enable countries like Poland to secure their energy independence. Most of the European Union has become more dependent on Russia and the producers in the Middle East for their oil and gas supplies. For example, the United Kingdom can no longer rely solely upon North Sea oil for its energy needs, and now imports about 25 percent of its gas requirements. Although many United Kingdom coal mines closed during the Thatcher era, UCG can provide a suitable energy alternative.
A number of factors make the use of UCG for alternative sources of energy a compelling story. UCG uses deep, underground coal, without ever removing it from the ground. Consider traditional coal mining and the massive costs it carries for infrastructure and coal handling. In favour of UCG is the fact that this stranded coal resource, sometimes more than 200 metres in the ground, can be exploited without such associated mining costs.
“Coal suitable for UCG has no traditional economic value. This deep coal would be far too expensive to extract, and it is not of a quality that is useful for typical coking or thermal methods,” suggests Bond.
“The value of this coal is only realised when, during the UCG process, synthesis gas is produced and extracted via a simple well. This synthesis gas is an ideal feedstock for electricity generation and fuel production, such as diesel and jet fuels. Again, further value is then realised in these energy products,” he says.
Linc Energy owns billions of tonnes of coal in Australia and the United States, and is looking to own another 1.2 billion tonnes of coal in Europe.
“Coal is certainly the most abundant carbon fuel source in the world, and its known reserves are suggested to last about four to five generations,” says Bond. “That is why UCG makes for one of the most exciting energy stories of this century. UCG can create energy sources, making energy more secure and much cheaper than it currently is, whilst creating opportunities for greater levels of energy independence. I am really optimistic about Linc Energy’s UCG commercialisation plans,” he says.
Linc Energy has been active in the UCG game for over ten years. Its first UCG field was constructed and commissioned at its Chinchilla Demonstration Facility, some 300 kilometres west of Brisbane, Australia. Today, fours generators have been established at the demonstration site, each one improving and perfecting the once-Russian UCG technology.
“Linc Energy is leading the way in UCG for its commercialisation. We have the most qualified and experienced technical team in the world. We have taken the traditional UCG technology from the Former Soviet Union, and have improved it in Australia for greater efficiencies,” says Bond.
“We have moved from the traditional vertical process, to a horizontal one, which carries better production outputs for commercial operations,” he says.
Linc Energy has identified a coal mineralisation target of 1.0 to 1.3 billion tonnes in the Walloway Basin in South Australia, near the rural town of Orroroo. It is in this location that Bond plans to establish Linc Energy’s first commercial UCG operation for the production of electricity in the first instance, and diesel and jet fuel thereafter.
“South Australia has a lot of commercial potential. Our aim is to first establish UCG and produce synthesis gas for electricity generation, with a capacity of up to 500 megawatts. After that, we will progress with the use of synthesis gas for fuel production, such as diesel and jet fuel,” says Bond.
“There is still work to be done as we progress towards commercialisation. This includes finalising the exact UCG location and obtaining the necessary government and environmental permits. Next year may see the world’s first commercial UCG operation in South Australia.”
As populations grow and countries strive for increased urbanisation, the air quality in today’s cities undoubtedly suffers. In a carbon conscious era, one where emissions trading schemes are discussed at length, UCG technology offers a breath of fresh air. The use of diesel and jet fuels produced using synthesis gas from UCG technology can greatly improve this situation. Fuels produced using UCG synthesis gas contain less particulates, nitrogen oxide, and sulphur oxide than conventional transport fuels.
“What is unique about Linc Energy is that we combine UCG technology with well known Gas to Liquids (GTL) technology to diversify our production and ultimately optimise the coal resource,” says the Linc Energy Chief Executive Officer. “Linc Energy is the only company in the world to have combined UCG and GTL technologies at our Chinchilla Demonstration Facility,” says Bond.
At Linc Energy’s Chinchilla Demonstration Facility, technical experts have proved the world-first achievement of producing liquid transport fuels from UCG synthesis gas.
“Linc Energy has demonstrated UCG synthesis gas is indeed a suitable feedstock for GTL technology. For every tonne of coal converted, about one and half barrels of oil1 can be produced,” says Bond.
“We are focused on being an integrated energy company. We can optimise cheap coal for UCG to produce energy solutions – electricity, transport fuels, chemical manufacture. We have an agreement with BP Australia to take our fuels at the gate for them to on-sell at retail level,” he says.
So what does UCG mean for the European Union?
“Well, the European Union may be a good location to consider for Linc Energy. We are looking at all options for electricity generation, in both the European Union and the United Kingdom. Some of these potential projects may be between 200 and 400 megawatts. Electricity generation is the first building block for Linc Energy to build and expand upon,” says Bond.
“Our first step into the European Union is likely to be the United Kingdom, but we have not identified a site as yet. Once preliminary work is complete, we could essentially be operational within six months and commercially operating within twelve months,” he says.
The biggest European opportunity for Linc Energy appears to be in Poland. The largest brown coal field in the entire European Union has been discovered near the south-western Polish city of Legnica. Media reports suggest that it has around 40 billion tonnes of untapped coal deposits, and 15 billion tonnes of this coal is suitable for mining at a depth of 200 metres. This means the site could hold eight percent of the world’s coal resources, covering 34 percent of the country’s energy requirements, whilst satisfying Poland’s power needs and boosting its mining industry.
Linc Energy joined a delegation to visit the region in March this year. Linc Energy’s Commercial Manager David Smith attracted the interest of the region’s coal operators when he made a proposition to use UCG to turn the brown coal into high quality synthesis gas. With already over 13,000 investors, Linc Energy is on track to deliver value. At this stage, its key energy producing targets are in Australia and North America. Linc Energy owns over 296,000 acres of traditional oil and gas leases across the North American states of Alaska, Montana, North Dakota and Wyoming.
“North America has a lot of potential for UCG. We have established three offices to progress Linc Energy’s entrance into the United States clean energy market,” says Bond. In the United States, Linc Energy is busy conducting site selection and other feasibility studies, as well as building a very talented United States team.
“We are intent on establishing a global company, where our UCG and GTL technologies can be easily replicated in different locations,” he says.