Underground Coal Gasification, or UCG, is one of the lesser-known unconventional gas sources, can you explain what it is?
Essentially UCG is the conversion of coal in situ into gas products and heat. In its simplest configuration, a pair of bore holes is drilled into the coal seam. Then, steam and air or oxygen (depending on the setup) are injected into one, creating a combustion zone (called the cavity) which liberates a mixture of carbon monoxide, carbon dioxide, methane, and hydrogen gas through the other bore hole. Aside from the fact that the coal seam is the gasification chamber, there’s nothing particularly exotic about the setup – in fact, it maps pretty well to above ground coal gasification, except that below ground there is a trade-off of more problematic control of the process for lower infrastructure costs.
The basic process has been around since engineers performed the first trials in the mid-late 19th century, and since then, around a hundred trials have been conducted in Europe, Asia, North America and Africa. Outside of a few major innovations, the overall technology has remained fairly constant in the century and a half since the first trials. One structural disadvantage lies in the fact that the fuel is static and thus, as it combusts out, the infrastructure must follow it; that is to say, injection wells must be periodically re-drilled in order to follow the receding face of the chamber. In the early 1980s, however, the US Department of Energy pioneered Continuously Retracting Injection Point (or CRIP) gasification, where coiled tubing is used to drill from the injection well along the axis of the coal seam. Then, as the combustion face retreats, the injection well head can be continuously withdrawn in order to follow it; thus, only one injection well is needed.
What are the underlying economics of UCG at the moment?
There’s not really an economic case for UCG at the moment; it’s still waiting to be scaled up to the point where it’s actually competitive with other sources of energy. But there are pilot projects going on around the world and I could see UCG projects becoming commercial on a large scale by 2025. In terms of production costs, the UK Government’s then Department of Trade and Industry (which is now the Department for Business Enterprise and Regulatory Reform) completed probably the best cost analysis in its 2002 study which indicated that UCG could be competitive with above ground coal gasification, maybe at prices of around 2-4p/kWh, depending on carbon capture options and project size.
What are the chances of UCG becoming economically viable? What time-scale are we looking at?
It is contingent on so many things such as regulatory barriers and the finding of a scalable application for it. There are still uncertainties as to whether it competes with gas going into the pipeline, whether it competes with regular gas-to-liquids, or whether it should be used as a power source. A lot of UCG development is going to be contingent on a carbon signal. I think if you get a significant long term carbon price from the EU ETS [European Union Emissions Trading Scheme] a UN climate change accord, or legislation in the US, then it could be competitive both against coal and gas for power, depending on carbon capture options.
What are the main regulatory barriers to the development of UCG in the UK?
The UK is working on a regulation and licensing regime for UCG. The problem was that it had seemed that dual licensing would be required under both the Coal Mining Act and also under hydrocarbon legislation; however, as very recently the first UCG blocks have been licensed in the UK under the Coal Authority, it appears that, at least for the first application, the issue has been resolved and that UCG falls under coal licensing, assuming the developer can demonstrate that all hydrocarbons produced are directly from the coal (as opposed to naturally occurring). It’s a first step for the UK, but it’s a simplifying one.
On top of the regulatory barriers there is a “barrier of acceptance”. In Europe in general you have a combination of denser population - which means that practically everywhere you could mine you’d be in closer proximity to where someone lives - plus a system of approval which often involves going through local councils or authorities, which tends to lead to greater resistance to new energy projects, including UCG.
For instance, in the early 2000s when DTI developers tried to run a demonstration UCG process, the project was stopped by local action. People were concerned about the prospect of subsidence and the possibility of coal-seam fires “burning underneath their feet”. This concern possibly stemmed from incidents of out-of-control coal seam fires in places such as Centralia in Pennsylvania in the US. Where a series of shallow- seam coal fires have been burning for decades and also, essentially, the town has had to be abandoned. There have been fears that a UCG accident could yield a similar scenario, but cases like Centralia – where shallow coal seams have access to the atmosphere - are not really comparable to a constantly monitored, carefully managed combustion process in very deep seams. Perhaps the way forward in the UK will be in gasification of the country’s submarine coal reserves; it’s notable that the first license granted in the UK for UCG, as I understand it, was for a block under the North Sea.
Where are the key regions for growth of UCG development? What are the driving forces behind development in these areas?
Wherever there is coal, developers are looking at projects. The strongest growth is in Australia right now, with companies including Linc and Cougar as notable leaders of worldwide development of the industry. Linc is using a traditional gas-to-liquid process entrained with UCG to produce diesel fuel. In 2008, they started commercial operations; currently, they have up to four generators, with an ultimate target of producing 50,000 bpd at, “anywhere between $18 and $28 per barrel” (according to their public information). Other companies in Australia such as Cougar have similar commercial prospects and are publically traded companies, though it’s not certain if they are yet making any money. From a production and marketing perspective, in Australia you have a fortunate combination of a lot of coal, flat, well-documented geology, technical expertise, and a lack of native petroleum resources.
Poland is another country where they have assessed their resources very well. I think the driving factors for possible UCG there might be similar to those behind shale gas; good supply and an interest in finding a way to supplement pipeline and LNG imports. There is a lot of stranded coal in Poland and some deep mines are not economic to work anymore. It’s a place where they have invested heavily in analysing the reserve base.
South Africa is another area of activity; power utility Eskom is developing a project in Majuba and has been gasifying coal in an “unmineable” deposit since 2007.
What is the prime use for UCG?
It varies; in Australia, for example, UCG is used primarily for coal-to-diesel projects. When it was first developed as an above-ground process in the 19th Century, coal gasification was used to produce “town gas” for municipal lighting, but starting around the first few decades of the 20th Century there was a big push to develop underground processes to provide electricity. For instance the Soviets, before they discovered their gas reserves in the 70s, had built a number of UCG plants, usually for power production. Other options are to produce methane, which can be cleaned and injected into a pipeline or to produce hydrogen and carbon monoxide (which is syngas, a constituent of what used to be called “town gas”). There is also the potential to produce hydrogen for fuel cells, and there is the potential to use gasification products as precursors for chemical products such as methanol. So there are many possible applications.
What are the disadvantages of UCG?
As with shale gas there is the potential for groundwater contamination. In fact an Australian UCG company had to suspend their operations because inspectors found Benzene in a test borehole - it was at a concentration just below what is considered hazardous under Australian environmental protection agency standards, but people living near the site expressed acute and understandable discomfort at the possibility of Benzene in their drinking water. There are also fears that UCG combustion may lead to subsidence. Cost efficiency and stranded costs are another issue; if you’ve invested in a lot of coal-fired stations then why not just dig up the coal and send it to them instead of going to the trouble of burning underground? Again, why not just build an aboveground gasifying plant, as the process is the same, just taking place in a purpose-built, aboveground reactor where the operator has better control of the combustion reaction, whereas in the case of UCG power generation, your production is dependent upon not-directly-seen geological and chemical qualities of the coal seam.
And the main benefits?
Gasifying coal underground avoids the costs of mining as you don’t need to build an above-ground reactor - the coal seam effectively acts as the reactor. There is a push in Europe and elsewhere toward developing Carbon Capture and Storage (CCS), and to do that you need to concentrate, collect, transport and finally find a reservoir for the captured CO2. With UCG you have a concentrated (relative to a traditional coal or gas plant) stream of CO2 produced which could possibly just be pumped back into the coal seam and - if you have tight enough capping from the overburden - could essentially be stored right there. So UCG could save a step in and costs for the capture and storage of carbon emissions by eliminating the need for long pipelines to ship the CO2 from the power station to the reservoir storage, as on most sites the power plant and storage aren’t located in the same place. But, again, this has been modelled but hasn’t really been tried in the real world.
What is the future for UCG?
UCG is versatile in terms of its end-products and it is technically proven; however, after more than a century it has not found a large-scale commercial application and the immaturity of the UCG market is likely a barrier to investment for risk-averse energy companies and potential developers.
Currently, UCG might best be seen as a niche source of products - including diesel, pipeline gas, and hydrogen - from stranded coal resources for which traditional mining is prohibitive. As the infrastructure develops, and as carbon prices rise, larger-scale UCG, coupled with CCS, might compete with traditional coal and gas in electricity markets.
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