Converting coal in the ground directly into clean-burning gases could have huge environmental benefits--not the least of which would be the avoidance of destructive mining operations. The problem is, technology for underground coal gasification is still in its early stages.

Now the government of Alberta says it will give C$285 million ($271 million) to a coal gasification project by Calgary-based Swan Hills Synfuels that involves the deepest-ever operation to generate power from coal--without digging it up.

Previous demonstrations of the technology have turned coal seams as deep as 1,000 meters below the surface into clean-burning gas. In contrast, Swan Hills Synfuels' C$1.5 billion project proposes to reach down 1,400 meters. Working at that depth could lessen the threat of groundwater contamination from the smoldering decomposing coal. "We've got 800 meters of rock--a lot of it impermeable--between us and freshwater aquifers," says Swan Hills president Doug Shaigec.

What's more, if the technology can get at deeper layers of coal, it could allow access to much more of the fossil fuel, says Julio Friedmann, who is carbon management project leader for Lawrence Livermore National Laboratory in California.

When the project starts up in 2015, Swan Hills hopes to generate 300 megawatts of power from its coal gas while selling over 1.3 million tons of carbon dioxide per year. The CO2 could be used by oil producers and ultimately stored in oil wells. This could result in the storage of 10 to 20 million tons of carbon dioxide per year by 2020. That would help Alberta meet its 2020 goal for carbon capture of 25 to30 million tons per year, according to a report last month from an alliance of Canadian industrial firms.

Pilot testing by Swan Hills confirms the viability of these promises, according to Shaigec. He says the pilot produced excellent gas using a pair of adjacent wells spaced 50 to 60 meters apart, installed in the coal seam with the same directional-drilling techniques behind the accelerating production of natural gas from shale deposits.

Oxygen is driven down the feed well and the coal seam is ignited, driving the temperature to 800 to 900 ºC and the pressure to almost 2,000 PSI. Under those pressures, the oxygen, coal, and saline water (present in the coal and also injected via the feed well) react to form a gas that is roughly one-third methane and two-thirds hydrogen, along with some carbon monoxide and carbon dioxide. The gas is drawn to the surface via the adjacent production well, where the carbon monoxide is converted to hydrogen and CO2, and all of the CO2 is removed.

Shaigec is tight-lipped about how Swan Hills managed to achieve gas flow between its wells, given the low permeability of coal squashed under 1,400 meters of rock. "We have used mechanical means to establish an adequate communication path between the wells," he says, using "standard drilling, completion, and stimulation techniques." The standard mechanical method by which shale gas production is stimulated is the fracture of rock with high-pressure water.