Friedmann says interest was resparked worldwide when natural-gas prices peaked a few years ago. Pilot projects in South Africa, for example, prompted state power company Eskom to plan a 2,100-megawatt power plant fuelled with UCG syngas, starting with an initial 375-megawatt unit by 2011. Several pilots are being planned in the United States, including one in Wyoming backed by BP.
Following a 100-day run this spring at Bloodwood Creek test site in Queensland, Australian UCG developer Carbon Energy estimated that it could generate syngas for A$1.25 (US$1.10) per gigajoule of energy, at a time when Australian natural gas was fetching A$3.50 to A$7 per gigajoule. Those economics enabled Carbon Energy to raise A$32 million in June, which the firm is using to install a small five-megawatt generator this winter and engineer a 20-megawatt power plant for late 2010. Ultimately it plans to build a 300-megawatt power plant at the site.
What UCG still needs, however, is research to demonstrate that it is environmentally friendly. On its face, UCG looks like a big improvement over mountaintop removal and other forms of coal mining, but it comes with its own set of environmental risks. Friedmann says that solutions for two of the concerns–the sparking of underground coal wildfires and the contamination of groundwater with carcinogenic combustion byproducts–have already been demonstrated.
Proper siting and operation are the key to avoiding the ground contamination that occurred at a few early U.S. tests of UCG. And he says that UCG operations will be too deep for uncontrolled coal-seam fires. That leaves coal combustion’s unavoidable byproduct: carbon dioxide. Producing and burning UCG syngas generates twice as much carbon dioxide as natural gas, making carbon capture and storage a necessity. Many UCG developers continue to promote the idea that carbon dioxide captured from UCG-fired power plants can simply be pumped into the underground cavity left behind by the gasified coal. But Friedmann says that idea will require a decade of research. “On technical grounds, it appears that there may be a credible pathway to doing that,” he says. “But we are far away from being able to do that commercially today.”
But even if carbon capture and storage at a UCG-fired plant looks much like it would at power plants burning mined coal, the net cost could be much lower, thanks to the low cost of UCG syngas. Friedmann estimates that UCG-based power plants capturing half of their carbon dioxide and storing it in deep saline aquifers could be competitive with natural-gas-fired power plants in the U.S. if natural gas prices stay above $3 to $4 per gigajoule (which is just above the current gas price).