Digging deep for energy security

Oil prices are rising. So is demand. One Australian company is now leading the way to recover energy from deep, stranded coal for the production of cleaner electricity, liquid fuels and greater energy security

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Australia is rich in coal resources yet reliant on imported oil products for most of its transportation energy needs.

Australian company Linc Energy has successfully combined two technologies, Underground Coal Gasification (UCG) and Gas to Liquids (GTL), in a world-first achievement to provide Australia and other nations with an opportunity to produce energy solutions from their own resources. The most advanced UCG player in the western world, the company is at the forefront of this now growing global industry.

Linc Energy began UCG trials on farmland in Queensland’s coal-rich Surat Basin, 300km west of Brisbane, Australia. Ten years on, Linc Energy’s Chinchilla Demonstration Facility is the first in the world to demonstrate coal conversion underground for liquid fuels production.

Coal gasification is not new. Since the 19th century it has been used to supply heating gas to cities, generate electricity from gas turbine power stations, and produce synthetic liquid fuels. One commercial UCG operation remains in the former Soviet Union. Known as Yerostigaz, this operation continues to supply UCG synthesis gas to substitute the coal supply for a power station. Linc Energy has a controlling interest in Yerostigaz and works to improve production capabilities and capture knowledge from its forty-plus operating years.

UCG allows energy to be recovered from deep, lower rank coals, otherwise worthless for conventional mining. UCG converts coal in the ground into synthesis gas (syngas) of primarily carbon monoxide and hydrogen. To convert coal to gas, an oxidant (air or oxygen) is injected into the coal seam through a well. The coal seam is then ignited. Heat from combustion, with water in the coal seam, allows for the conversion of coal to syngas. Syngas is then extracted from a production well.

Syngas has a number of uses. It can be used in industrial processes including power generation, liquid fuel production, and chemical manufacture. It is a suitable feedstock for gas turbine power generation and is ideal for the GTL process for cleaner liquid fuel production (diesel and jet fuel). Fertilisers, base oils, and waxes are all possible products from syngas. Linc Energy is focused on UCG for cleaner power generation and fuel production. UCG extracts otherwise worthless coal, and its use could potentially increase global coal reserves from 900 billion tonnes to 1.5 trillion tonnes.*

At the Chinchilla Demonstration Facility, UCG syngas is used to produce synthetic hydrocarbons in an aboveground GTL facility. Syngas is fed through a plant to clean the gas, removing contaminants. The key component of the GTL facility is the Fischer-Tropsch reactor. This reactor contains a catalyst to transform the clean gas into liquid hydrocarbons.

Synthetic hydrocarbons can be refined to produce high quality, zero sulphur, cleaner diesel and jet fuel. Impurities removed before the gas is converted to liquid, and the highly paraffinic nature of the fuel, means GTL products have superior properties in terms of combustion efficiency and emission characteristics.

In a carbon constrained world, UCG has a number of advantages compared with conventional mining and aboveground gasification. These include a 25 percent decrease in greenhouse gas emissions (power generation); elimination of large scale soil and rock disturbance; elimination of dust, ash and slag; reduced visual impact; lower risk of surface water contamination; and a lower demand for water (no need for coal dewatering or a coal preparation plant). For GTL operations, there are significant reductions in sulphur oxide, nitrogen oxide, heavy metals and particulate matter; and the reduction of solid waste.

For combined commercial UCG to GTL technologies, modelling and prediction is highly important. Linc Energy has applied modelling to its trial operations to predict UCG and what happens under the ground. Modelling enables Linc Energy to significantly reduce the risk of any groundwater contamination. With ten years of trial operations experience in Chinchilla, Linc Energy has never registered groundwater contamination and maintains a rigorous monitoring and data capture program. Subsidence models have also been prepared to minimise risks to the surface of the land. With the right geology, careful control of operating conditions, and pillars left between cavities, impacts can be minimised.

Linc Energy has a solid coal resource position in Queensland, South Australia and the United States. Options for UCG and GTL commercialisation are well underway. In Australia, drilling to locate UCG-suitable coal has occurred in Queensland’s Surat Basin and the Arckaringa and Walloway Basins, South Australia. Recent drilling results indicate the first UCG to GTL commercial operation will be established near Orroroo, 270km north of Adelaide, South Australia.

In preparation for UCG to GTL commercial operations and the production of 20,000 barrels of cleaner diesel per day, Linc Energy has a Memorandum of Understanding with one of the world’s largest energy companies, BP Australia. This defines BP Australia as Linc Energy’s first major customer, agreeing to purchase a minimum of 14,000 barrels per day of the cleaner diesel fuel product.

With a solid resource position in Australia, Linc Energy is also pursuing UCG and GTL commercialisation abroad. Locations in North America and South-East Asia are being evaluated for power and fuel production projects. In September 2009, Linc Energy completed the purchase of 94 Powder River Basin coal leases in Wyoming, United States. A site office has been established in Casper to enable UCG trials to start for UCG syngas production. Linc Energy will also open a US head office in Colorado to pursue other UCG and GTL projects in North America.

Linc Energy is also working with VINACOMIN (Vietnam National Coal Minerals Industries Group) and Japan’s Marubeni Corporation to develop a trial UCG project 60km south-east of Hanoi, Vietnam. This region needs power. If the trial is successful, a commercial UCG power project could supply electricity to over six million Vietnamese households. Combined UCG and GTL technologies present a compelling, alternative energy solution for Australia and other suitable locations around the world.

* World Energy Council, 2007