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Exploiting China's Coal While It's Still Underground

Turning coal seams into underground gasification chambers could cut costs and pollution—if done right.

China is pushing forward with a new strategy for expanding access to coal energy that could also reduce its environmental impact: turning coal into clean-burning gases in the ground.

Going underground: Coal ignited 1400-meters underground delivers a clean-burning blend of carbon monoxide, methane and hydrogen at a demonstration site in Alberta.

At a U.K.-Chinese summit in Beijing late last month that included British prime minister David Cameron and Chinese premier Wen Jiabao, a $1.5-billion commercial partnership was launched to gasify six million tons of buried coal per year and generate 1,000 megawatts of power.

The project in Inner Mongolia’s Yi He coal field is being advanced by the state-owned China Energy Conservation and Environmental Protection Group, and U.K.-based Seamwell International, a newly formed developer of underground coal gasification (UCG) technology. It is the most high-profile of several such proposed projects in China. More than a dozen similar large-scale projects are under development in other countries, including the U.S., Canada, Australia, and Hungary. 

UCG is promoted as a relatively clean method of exploiting coal seams that are too deep or thin to be tapped economically using conventional mining. Such seams in Inner Mongolia hold an estimated 280 billion tons, according to Seamwell. That’s more than double the tonnage of recoverable coal in China recognized by the London-based World Energy Council. UCG can also generate electricity from coal with less air pollution, greenhouse gas emissions, and water consumption than existing coal-fired power plants.

What remains to be proven, however, is whether UCG can operate at large scale without contaminating groundwater. Last week, Australian regulators laid charges against Melbourne-based UCG developer Cougar Energy for allegedly contaminating groundwater, and there are signs that this is a rising concern for Chinese regulators.

The chemistry of UCG-based power generation is akin to that of gasification power plants, such as the 250-megawatt GreenGen projected expected to start up late this year in Tianjin, China, in which heat and pressure turn coal into a combustible mixture of carbon monoxide and hydrogen known as syngas. UCG exploits drilling technology to engineer the coal seam itself into an underground gasification reactor. Wells drilled into the coal seam supply air or oxygen, and sometimes steam, to burn some of the coal, and generate heat and pressure to gasify more coal, and then deliver the resulting syngas to the surface.

China’s largest pilot project suggests that UCG will be economically competitive, according to data presented this spring by Beijing-based energy giant ENN. Feng Chen, ENN’s chief engineer for UCG, reported on 26 months of gasification at a CAN$1 billion ($155 million) UCG operation at Ulanchap, Inner Mongolia, which generates five megawatts of power. He projected that UCG can supply power 27 percent cheaper than plants such as GreenGen that gasify coal above-ground.

Sevket Durucan, a professor of mining and environmental engineering at Imperial College London and a technical advisor to Seamwell, says existing drilling data suggests the roughly 400-meter deep coal seam the U.K.-Chinese group is targeting could support a major UCG project. “There’s quite a large deposit there. On paper it looks good,” says Durucan. He says that additional drilling will begin this month in Inner Mongolia to confirm the site’s promise as well as the project’s environmental credentials.

Duru can says that, on average, the carbon footprint of UCG-based power generation should be 20 percent lower than power generation via the pulverized coal-fired power plants that predominate in China, thanks largely to the avoidance of methane emissions from coal mining. It could cut carbon emissions in half if equipment to capture and store the plant’s carbon dioxide exhaust is added—an option that Durucan says is under consideration for the U.K.-Chinese project.

This summer’s investigations will provide more specific data on the project’s likely greenhouse gas benefits. It will also assess the risk posed to groundwater. Burning and gasifying coal underground produces carcinogenic by-products such as benzene. Durucan says groundwater contamination is “a concern that one must consider,” but one that can be managed by “how one controls the gasification process and pressures.”

Others have a mixed assessment of UCG’s potential impact on water supplies. Doug Shaigec, president of Calgary-based UCG developer Swan Hills Synfuels, says the U.K.-Chinese project could benefit China’s arid coal regions if it exploits nondrinkable saline water formations to supply the water consumed by the gasification process—something Swan Hills plans to do at its 1,400-meter deep, CAN$1.5-billion ($1.6-billion) UCG project in Alberta. However, he says, proximity to aquifers could be a deal-killer for shallower UCG proposals. “We do not believe that it is appropriate to practice UCG in freshwater aquifers,” says Shaigec.

Groundwater concerns appear to have killed Cougar Energy’s UCG pilot project in Queensland, which the state’s environmental authority shut down last summer after the project’s gas production well ruptured and Cougar reported trace levels of benzene and toluene in groundwater. Cougar has contested the shutdown, and issued a statement this week asserting that “there have been no concerns with water quality in local water bores.”

But some industry sources back the regulator’s decision. “That is Queensland doing their job as they should do it. It wasn’t a knee-jerk reaction,” says Julie Lauder, CEO of the UCG Association, a Surrey, U.K.-based industry association.

Even in China, which has a less developed system of environmental enforcement, shallower projects may face scrutiny. Cougar Energy announced late last month that local authorities had requested “further technical and environmental details” on the 200-meter deep coal seam and 400-megawatt power plant it proposes to develop in Inner Mongolia’s Wu Ni Te coal deposit with Inner Mongolia DeTailong Investment Energy. Cougar says the project, once slated to begin this spring, would now be delayed another two to three months.

Lauder says that aggressive regulation will ultimately protect responsible developers of UCG technology. As she puts it: “At this stage of the game, a bit of bad press can affect everybody.”

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