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UCG shut-out to cost Qld billions: MetroCoal
Monday, 24 November 2008

QUEENSLAND is being warned it could risk losing billions in long-term mining royalties from the emerging underground coal gasification industry if the state agrees to BG Group’s demand for exclusive access to the coal in its extensive exploration permits.

UCG proponent MetroCoal said BG Group is attempting to stop competition and lock out UCG companies for at least five years in a move that would cost Queensland billions in lost revenue and leave Australia more reliant on imported fuels.

According to the company, BG has threatened the state government it would scrap its planned $15 billion liquefied natural gas plant at Gladstone – which uses coal seam gas – unless it gets exclusive rights.

MetroCoal chief executive officer Mike O’Brien said it was possible for CSG and UCG to co-exist, but he added that some CSG companies refused “point blank” to even discuss cooperation arrangements where there are overlapping tenements.

“We have looked to work with CSG companies but BG Group is trying to bully the state government to get its own way and stop competition and domestic growth in the energy sector,” he said.

“If the BG Group gets exclusive rights, it will sterilise hundreds of millions to billions of dollars worth of coal in the Surat Basin and elsewhere, and shut out an emerging industry that can make an enormous contribution to Queensland through jobs and royalties and to Australia through savings in foreign exchange.

“It is estimated UCG can produce billions in royalties for Queensland alone over the next 20-plus years and could supply clean diesel, fertilisers and transport fuels for many decades.”

O’Brien also said the UCG process allows the exploitation of extensive, valuable coal deposits that would otherwise be abandoned.

“Typically these are thermal coal seams that are too deep to be economically mineable by conventional methods,” he said.

“Significantly, UCG generates up to 20 times the revenue from the same area compared to CSG, has a demonstrably smaller footprint, no mining is involved and importantly requires no brine/water dam constructions.

“The fuels produced are of immense strategic importance to Australia, reducing our reliance on imported fuels and saving many billions of dollars in foreign exchange.

“Australia has already past peak oil and APPEA estimates that by 2015 we will be importing over 600,000 barrels of liquid fuel and oil per day.

“BG’s position will end every opportunity for UCG to go a long way in filling this trade imbalance,” O’Brien said.