Technology Review has a somewhat skeptical article on the prospects for UCG - Underground Coal Gasification (covered here previously in articles on coal to liquids and coal seam gas) - Fire in the Holes.
Turning coal into clean-burning gases in the ground can avoid the environmental impact of mining coal and halve the cost of managing its carbon-dioxide emissions. But while a few pilot tests of such underground coal gasification (UCG) are moving towards small-scale commercial operations in Australia, China, and South Africa, much research is needed to improve the control of UCG operations and to prove their environmental safety, according to a report issued last month by the Clean Air Task Force, a nonprofit environmental consulting firm based in Boston. "It's tricky business--you don't just go out and drill a well and declare victory," says report author Julio Friedmann, who is carbon management project leader for Lawrence Livermore National Laboratory in California. ...
Friedmann says interest was resparked worldwide when natural-gas prices peaked a few years ago. Pilot projects in South Africa, for example, prompted state power company Eskom to plan a 2,100-megawatt power plant fuelled with UCG syngas, starting with an initial 375-megawatt unit by 2011. Several pilots are being planned in the United States, including one in Wyoming backed by BP.
Following a 100-day run this spring at Bloodwood Creek test site in Queensland, Australian UCG developer Carbon Energy estimated that it could generate syngas for A$1.25 (US$1.10) per gigajoule of energy, at a time when Australian natural gas was fetching A$3.50 to A$7 per gigajoule. Those economics enabled Carbon Energy to raise A$32 million in June, which the firm is using to install a small five-megawatt generator this winter and engineer a 20-megawatt power plant for late 2010. Ultimately it plans to build a 300-megawatt power plant at the site.
What UCG still needs, however, is research to demonstrate that it is environmentally friendly. On its face, UCG looks like a big improvement over mountaintop removal and other forms of coal mining, but it comes with its own set of environmental risks.