Australian UCG Industry aiming for commercial power generation  

The SMH has an article on the slowly emerging UCG industry in Australia (making progress towards commercialisation despite resistance from the coal seam gas industry) - Technology to help fuel the future.

The coming of age for UCG has been lengthy. The technology was first developed in the 19th century and encouraged in Joseph Stalin's Soviet Union. The process works by injecting oxidants down a production well and over non-mined coal seams. The combustion results in gas that is transported up a second well, where it can then be used as a fuel, a chemical feedstock or for power generation.

Cougar Energy managing director Len Walker, one of the pioneers of UCG in Australia, says rising energy demand has put the technology in play.

''When I founded Linc Energy in 1996, or even when I founded Cougar more than two years ago, there was very limited interest in UCG,'' Dr Walker says. ''There was also very little going on overseas at the time. Apart from Linc Energy, Carbon Energy and ourselves, which are the big three in the space, I have counted six or seven other listed companies that have recently popped up and which are all promoting UCG in different ways.

''I have never seen anything like it in the 30 years that I have been involved in UCG. The genie is out of the bottle and it is unlikely to be put back in the bottle again.''

Walker says an important difference between UCG and coal seam gas is that the latter is produced for conversion into liquefied natural gas and the export market, while the former is aimed at domestic supply.

''It would take far too much effort to convert underground coal gasification for export,'' Walker says. ''Everyone can see energy prices going up but if we can bring this to market, and clearly I am a firm believer in that eventuating, then we will be underpinning the price of gas in Australia.''

Last month Cougar announced ignition of its flagship Kingaroy project in south-east Queensland and the successful production of synthetic gas (or syngas).

The company will soon undertake a series of trials, underground and on the surface, that will be used for a pre-feasibility study and a subsequent bankable feasibility.

The composition and variability of the gas will determine the final design for Cougar's planned 400-megawatt power station, producing enough energy to power 400,000 homes for at least 30 years. Walker is hopeful of securing $300 million in combined debt and equity funding by early next year. The proceeds will fund its 200-megawatt stage 1 project to be completed by 2013.

Travel about 125 kilometres south-west of Kingaroy and you will find Linc's Chinchilla project, which has a slightly different take on UCG. It uses the process to convert coal to liquids, which it has been doing for about 10 years, and its goal is to produce 20,000 barrels a day - 10 per cent of Australia's current fuel consumption.

Linc chief executive Peter Bond says the company is looking at branching into power generation. ''What UCG is eventually used for is really driven by geography. So in Vietnam, for instance, power is in short supply so you wouldn't do anything else but power,'' he says.

''We are hopeful of putting in a power station in South Australia, which is being pushed through at a rate of knots because South Australia is really short on power supply. That would be a 200 to 400-megawatt commitment, with construction to start by the end of next year.''

Neighbouring Linc's tenements in the Surat Basin is Carbon Energy. Having completed its pilot burn more than a year ago, Carbon Energy is targeting a five-megawatt plant, which will be operational by midyear and be the first of its kind in the world.