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Underground coal gasification is cheaper then natural gas
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Economics

Underground coal gasification allow access to more coal resources than economically recoverable by traditional technologies. By some estimates it will increase economically recoverable reserves by 600 billion tonnes[9]. The Lawrence Livermore National Laboratory estimates that using UCG could increase recoverable coal reserves in the USA by 300%. According to Linc Energy, the capital and operating costs of the underground coal gasification are lower than in traditional mining.[3].


UCG product gas is optimally used to fire Combined cycle Gas Turbine(CCGT) powerplants, with some studies suggesting power island efficiences of up to 55%, with a combined UCG / CCGT process efficiency rate of up to 43%. CCGT power plants using UCG product gas instead of Natural Gas(NG) can achieve much higher outputs. In particular, this increase in efficiency over pulverised-coal-fired power stations (and associated upstream processes) results in a large decrease in GHG emissions.


UCG product gas can also be used for:

  • Synthesis of liquid fuels at a predicted cost equivalent to US$17/bbl;
  • Manufacture of chemicals such as ammonia and fertilizers; &
  • Enhanced oil recovery (EOR).


In the roles listed above, UCG product gas replaces the use of natural gas and can provide substantial cost savings. In demonstrating the economic benefits of UCG, South African utility Eskom, successfully produced gas at a significantly reduced cost of $1 per million BTU's at its Majuba operation, using Ergo Exergy's technology. This is between one third and one sixth of the cost of gas made in an equivalent surface gasifier. The gas is being used to fire an existing 4.2 GW powerplant.


Additional cost savings can be made over traditional coal mining and required coal transport, whereby the UCG process: produces syngas which can piped directly to the end-user, reducing need for rail / road infrastructure; and; lowers the cost of environmental cleanup due to solid waste being confined underground.With regards to new environmental markets, for example an emissions trading scheme,companies whose usual operations involve traditional coal mining and burning may see value in the reduced greenhouse gas emissions (GHG) generated using UCG as an alternative. The forecasted cost savings could be substantial given the projected high cost of carbon abatement for coal industry companies who are impacted by regulatory schemes e.g. the Australian Government's proposed Carbon Pollution Reduction Scheme.


In 2008, Canadian company Laurus Energy, advanced their progress in combining UCG and Carbon capture and storage(CCS) to decrease costly externalities and further increase the technology's environmental credentials. This case study is further discussed in the following section.

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