One of the Last Great Untapped Reserves of Low-Cost Energy Cost...

One of the Last Great Untapped Reserves of Low-Cost Energy


Cost advantages reported by proponents of underground coal gasification (UCG) are so great that efforts to commercialize the technology are being applied in Australia, Asia, Europe, Africa and North America, even where natural gas prices are below $4/MMBtu. Ten new projects have been announced this year, for a global total of 51 projects in various stages of development; eight projects are operational.

UCG offers an amazingly low-cost avenue to monetize vast amounts of coal cleanly and cheaply. There is little doubt that its usage will grow as developing countries such as India, Bangladesh, Poland, and China work to provide low-cost domestic energy to their markets. UCG offers a means to tap the 90 percent of reserves too deep, thin or low-grade to mine, representing perhaps one of the last untapped reserves of cheap energy.

Several simultaneous breakthroughs in seismology, directional drilling and downhole equipment have converged to make UCG possible. Once gasified, the coal can be used to make diesel, gasoline, lubricants and many other petrochemical fuels and products. It is purportedly cleaner than traditional methods of mining because ash is left underground and safer because miners stay out of harms way. Costs per MMBtu range from US$2.00 to US$3.06, according to three recent studies, well below shale gas production costs.

UCG developers face significant challenges in winning government and public support, however. Past demonstration projects have led to environmental problems. This report reviews the industry and economics, presents key trends, discusses risks and profiles each of project.