State-owned miner Solid Energy says it will soon seek resource consents to burn Waikato coal underground, in a bid to turn 30,000 tonnes of coal into a hydrogen gas over the next two years.The $22 million underground coal gasification (UCG) pilot project
State-owned miner Solid Energy says it will soon seek resource consents to burn Waikato coal underground, in a bid to turn 30,000 tonnes of coal into a hydrogen gas over the next two years.
The $22 million underground coal gasification (UCG) pilot project in the north Waikato was announced today after a rival L&M Energy (LME) applied for prospecting rights over 2000sq km of the Waikato thought to contain more than 2 billion tonnes of coal -- with similar plans to burn coal underground.
Solid Energy said it wanted its UCG operation underway by the beginning of 2011 within the company's existing Huntly West coal mining licence area.
LME -- which planned to pipe its gas production to Auckland consumers -- has asked for permits bracketing the Huntly coal mines, which produce coal for supply to power generation and New Zealand Steel.
Both companies say burning coal underground to gasify coal will open up access to deep, difficult-to-reach, coal seams nearly impossible to mine using conventional technology.
Solid Energy's general manager new energy Brett Gamble, said the company had spent five years investigating the technology's suitability for New Zealand conditions.
A petroleum engineer, and senior lecturer at Auckland University, Dr Rosalind Archer, said she understood this would be the first commercial use of UCG technology in New Zealand.
"It's a big move on Solid Energy's behalf," she said today.
Solid Energy is using technology developed by Ergo Exergy and will pay it a royalty on the "syngas" produced underground. Mostly hydrogen, with carbon monoxide and carbon dioxide, the gas can be used in electricity generation, refined to produce pure hydrogen, and to make high-value products such as methanol, synthetic transport fuel, fertilisers or waxes, plastics and detergents.
Mr Gamble said the technology -- in which an operator on the surface set fire to a coal seam and then pumped air into it to turn some of the coal into gas -- was safe because the fire could be put out by cutting the airflow.
Solid Energy planned to drill up to seven wells about 25 to 50 metres apart into a coal seam 400m below the surface in an area measuring 300 metres long and 150 metres wide.
The pilot project will be used to gather technical and geological information, and check environmental effects, and the results will decide whether a commercial-scale operation is mounted.
LME said New Zealand was experiencing declining gas production from existing fields with inadequate supplies to feed fertiliser and methanol plants, and forward contracts for local gas were currently about $8 per gigajoule delivered to the pipeline "and future upward price pressure is expected to continue".
It said that coal thickness of up to 15m had been documented by mining and exploration in the big area it was targeting, with more than 250 holes having been drilled in various programmes, including its own eight wells for the extraction of coal seam gas.
