New ways of utilising our massive coal resource

New developments to identify and exploit sources of unconventional hydrocarbons are moving rapidly ahead. At the forefront is SOE Solid Energy. Traditionally coal miner supplying both local and international markets, it already has biodiesel and wood pellet plants in commercial production and will produce commercially from its first underground coal gasification (UCG) project next year.

That’s process in which the coal is burned where it lies and the resulting syngas is brought to the surface. Another method of recovering usable energy without actually having to mine the coal is to drill into the seams and extract the trapped methane – which to all intents and purposes is identical to natural gas from conventional sources.

Solid Energy chief executive, Dr Don Elder, describes UCG as “probably the world’s greatest [energy] development since nuclear power”. He says New Zealand’s coal reserves are vast – on global, per capita basis surpassed only by Australia. “The challenge is to use it in useful way.” The coal reserves already secured by Solid Energy, Elder says, are the equivalent of eight Maui gas/condensate fields.

While the company is well-positioned in its core coal business, it is the unconventional gas sector where it is directing major research and development. Elder is projecting annual gas production from UCG and coal seam gas (CSG) of 30 petajoules (PJ) by 2020 with the first UCG plant in the Waikato expected to reach production of 18PJ by 2018. “There is lot of upside potential,” Elder says. “This [output] could double by 2020 or soon after.”

Solid Energy’s Dr Steven Pearce says the Waikato coalfields alone held more than one billion tonnes of coal, but noted that much of it can’t be mined by conventional means. “It requires an enabling technology.” UCG, he says, complements conventional coal mining and greatly increases recoverable energy resources by converting coal into syngas. The Waikato project could have as many as 35 wells producing at any one time.

Solid Energy has already produced coal seam gas in the Waikato, feeding 1MW turbine to produce electricity in demonstration project. The first stage of commercialisation of this project is planned for next year.

Further south, there’s different approach for the lignite resources in the Southland province – tagged by Elder as “an unconventional petroleum play”. There, Solid Energy has been investigating coal-to-fertiliser project with the Ravensdown Fertiliser Co-op that could produce 1.2 million tonnes of urea annually, making the country self-sufficient in urea and creating export markets.

The process to be used would create synthesis gas from the lignite that would in turn be converted to urea. New Zealand has one other urea production facility in Taranaki that has been producing urea from natural gas at the Kapuni gas/condensate field.

Other likely possibilities are coal-to-liquids plant with 35,000 barrel-per-day potential and lignite/biomass to synthetic crude project. Elder says two demonstration plants could be established in 2011/2012.

Chris McKeown, business development manager for L & M Energy, says Southland alone could “conservatively have one trillion cubic feet of gas” to be recovered from its coal reserves. He says the company already has 173PJ of confirmed CSG in one of its Southland permit areas and has planning underway for pilot production project that should be in place by year-end.

CSG exploration has been going over the Ohai coal field since the early 1980s, with more than 100 wells drilled by various explorers into coal seams at depths of between 200m and 800m. McKeown says L & M has drilled 10 wells with gas recovery up to 10m3/tonne with methane content of up to 98%.

He says there are several possible markets for the CSG – among them onsite power generation, replacing or supporting imported LPG, cogeneration,

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