CSM vs UCG in Queensland  

Posted by Big Gav in , , ,

One company I mentioned in my post on coal to liquids (CTL) last year was Linc Energy, who are trying to produce CTL using underground coal gasification (UCG) in Queensland. The Australian reports that the state government is having second thoughts about allowing UCG projects to proceed, instead seemingly preferring the rapidly expanding coal seam methane (CSM) industry - State lets off steam in coal gasification plans.

THE Queensland Government appears to be putting the brakes on its emerging coal gasification industry as it considers environmental concerns and whether the industry can co-exist with plans for a $20 billion LNG export industry.

Queensland's coal fields have attracted an investment bonanza in recent years as companies including Santos and Queensland Gas Company plan to use coal seam methane to develop a massive new LNG export industry, and other firms such as Linc Energy continue long-standing efforts to commercialise the entirely different coal gasification technology, which burns coal deep underground to extract a gas that can be liquefied into diesel and aviation fuel.

Federal Resources Minister Martin Ferguson has hailed both CSM and coal gasification as crucial to Australia's future energy security.

But the Queensland Government has realised that in several cases it has issued rights over the same tenements to companies pursuing each of the technologies -- even though most say they are incompatible because the coal gasification process burns the methane that the CSM producers are seeking to extract. And the Government now believes that in the long run the market will support the full-scale development of only one of the technologies, with cost and greenhouse emission levels from the production process the deciding factors.

"I expect both will develop until the market works out which one is most cost effective, but at the end of the day only one of these technologies will emerge as the winner on cost and greenhouse grounds," Queensland Climate Change Minister Andrew McNamara told The Australian.

In the meantime, as it seeks to sort out the problem of overlapping coal gasification licences issued under the Minerals Resources Act and CSM licences issued under the Petroleum and Natural Gas Act, the Queensland Department of Mines has sought advice from the Queensland Conservation Council and has heard deep concerns about the environmental impact of the coal gasification process, including its carbon emissions and claims that it could contaminate ground water.

The QCC told The Australian that it considered coal gasification a "more environmentally questionable resource" than CSM and had recommended to the Government that no UCG project should receive approval to commercialise in Queensland.

A spokeswoman for Queensland Mines and Energy Minister Geoff Wilson said the Government "has no intention of granting production tenures for underground coal gasification for at least three years. Underground coal gasification is a new technology, untried in Australian conditions, and it poses some potential problems, especially with groundwater systems," she said. "We will only do what is best for Queensland. In this case, we don't believe it's in the best interests of Queensland to grant production tenures for technology that is untried."

And Mr McNamara said his department had asked Linc Energy -- the most advanced of the coal gasification companies -- to perform new demonstration trials so that the Environmental Protection Agency could monitor emissions and groundwater quality. "Linc has been asked to do another more rigorous trial of its technology; it is critical we make sure we don't contaminate our groundwater," he said.

Linc CEO Peter Bond, whose company has a market capitalisation of $1.45 billion and has seen its share price rise from just 20c to $3.50 over the past two years, rejects the notion that his technology is incompatible with CSM performing stringent environmental assessments entirely of its own volition.

3 comments

Anonymous   says 5:29 PM

Interesting article. Richard Cottie was in charge on Queensland Govn't owned CS Energy. Linc Energy run at that time by Cougar Energy's Len Walker had just completed the most succrssful UCG field test in the West (ergo exergy tech. partner). Linc had agreements with CS Energy for UCG to Power. Richard Cottie pulled the pin leaving Linc high and dry at that time Len Walker resigned, Richard Cottie took a job with QGC.

I would have say Richard ... ops I mean the Coal Seam Gas Lobby group is doing a fantastic number on the Queesland Govn't re UCG.

A very quick Summary
Queensland Govn't luvs CSG
Federal Govn't luv's UCG

One interesting aspect is that CSM seems likely to become LNG (that which doesn't go to power stations) while UCG will produce diesel fuel.

From a peak oil (or energy security) viewpoint the latter is preferable, which might explain why the Fed Govt favours that option.

LNG plants mean lots of investment and jobs, which may also explain the state govt bias (along with their power plants taking the gas).

A couple of follow up articles:

The Australian - Linc Energy shares rally after early plunge

THE Queensland Government last night backed away from a statement claiming that it would not issue any new licences for underground coal gasification technology for three years -- but not before the share prices of the two main companies operating in the area dropped dramatically. ...

The Queensland Government made its statement as a court battle continued between Linc Energy and coal seam methane gas producers Queensland Gas concerning access to coal-rich fields in the Surat Basin west of Brisbane. Linc Energy has tenements over land near Chinchilla, where it has a pilot plant burning coal underground using technology that originally came out of the Soviet Union. But while it has these tenements under the Minerals and Resources Act, Queensland Gas has tenements over the same land under the Petroleum and Natural Gas act.


The Australian - Clash over gas on the plains of western Darling Downs

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