Underground Coal Gasification - Economics

Economics

Underground coal gasification allows access to coal resources that are not economically recoverable by other technologies, e.g., that are too deep, low grade, or seams too thin. By some estimates, UCG will increase economically recoverable reserves by 600 billion tonnes. Lawrence Livermore National Laboratory estimates that UCG could increase recoverable coal reserves in the USA by 300%. Livermore and Linc Energy claim that UCG capital and operating costs are lower than in traditional mining.

UCG product gas is used to fire combined cycle gas turbine (CCGT) power plants, with some studies suggesting power island efficiencies of up to 55%, with a combined UCG/CCGT process efficiency of up to 43%. CCGT power plants using UCG product gas instead of natural gas can achieve higher outputs than pulverized-coal-fired power stations (and associated upstream processes, resulting in a large decrease in greenhouse gas (GHG) emissions.

UCG product gas can also be used for:

• Synthesis of liquid fuels;
• Manufacture of chemicals, such as ammonia and fertilizers;
• Production of synthetic natural gas;
• Production of hydrogen.

In addition, carbon dioxide produced as a by-product of underground coal gasification may be re-directed and used for enhanced oil recovery.

Underground product gas is an alternative to natural gas and potentially offers cost savings by eliminating mining, transport, and solid waste. The expected cost savings could increase given higher coal prices driven by emissions trading, taxes, and other emissions reduction policies, e.g. the Australian Government's proposed Carbon Pollution Reduction Scheme.