UCG revenue not lost, just deferredTuesday, 25 November 2008A...

UCG revenue not lost, just deferred
Tuesday, 25 November 2008

A PetroleumNews.net reader who calls himself an anonymous resource investor reckons the “billions of dollars of lost mining royalties” claimed by UCG proponent MetroCoal in yesterday’s article [UCG shut-out to cost Qld billions: MetroCoal] would only be deferred.

This "problem" of competing tenures and extraction processes is the unintentional creation of the Queensland government by granting competing gas extraction processes over the same dirt under two different sets of legislation – mining and petroleum.

I would suggest the optimum use of the state’s assets with regards to coal and associated values would be as follows.


1. State only grants coal leases where coal can be mined at surface or commercial depths – under the mineral act.


2. If the coal is known to have coal seam gas value, then only grant CSG extraction rights – under the petroleum act. No underground coal gasification rights to be granted.


3. Where the coal is known not to have CSG values because all commercial CSG has been extracted or low CSG content, too deep, too much ash etc, then grant UCG right – under the mineral act.



By this process, the state gains the maximum benefit from land holding coal at various depths.

I believe the Queensland government will act this way.

The royalties from UCG will not be lost, only deferred, as once all CSG is extracted, dirt will be available for UCG.

Where there is competing use between CSG and UCG for dirt that has CSG value, the UCG companies cannot compete against the planned investments of around $30 billion that Conoco/BG/Shell/Santos/Petronas have committed to over the last six months for a proven gas extraction technology.

In other states like SA, there is no competition between UCG and CSG as both are treated the same – under the Petroleum Act and held by Petroleum Exploration Licences, so this competition does not arise.

Might explain why Linc took over SAPEX in order to carry out its UCG projects.

Worldwide, CSG production and royalties are proven as CSG provides 10% of United States gas supply.

How much of the US gas supply does UCG supply? We all know the answer and why this is so.