SA Labor backs UCG coal scheme

May 1, 2010

As towns go, Orroroo in South Australia might seem small, but with 850 people it is one of the larger stops on the road between Broken Hill and Port Augusta. The countryside around it is marginal farmland.

Only in the occasional year is there enough rain for a good crop of wheat, and in a process with well-researched links to global warming, the wet years have been getting fewer.

It is ironic, therefore, that this district 250 kilometres north of Adelaide now seems destined to hurry climate change along.

North of Orroroo in the Walloway Basin, the firm Linc Energy has sunk a series of boreholes, finding, as company CEO Peter Bond exulted in a statement last November, “great coal, at ideal depth, [with] excellent coal seam thickness [and] good geology”.

“The location is just about perfect for what we are planning to achieve”, Bond said. “We value the strong support we have received from the local community and the South Australian government.”

What Linc plans for Orroroo is the first fully commercial underground coal gasification (UCG) operation outside the former Soviet Union. By setting fire to coal too deep to mine and turning it into flammable gases, the firm hopes eventually to fuel a 500-megawatt power station.

Along with the power generation will be a gas-to-liquids plant producing as much as 20,000 barrels per day of what Linc describes as "ultra-clean" jet fuel and synthetic diesel.

The first stage of the project, a pilot electrical generating plant, will operate by the end of 2010.

State mineral resources development minister Paul Holloway crowed to the April 16-22 Adelaide Independent Weekly: “Linc Energy’s investment confirms South Australia’s supportive policies can not only lure explorers, but can also ensure the crucial follow-up investment into mine construction, support services and technological development.”

Orroroo Council CEO Iian Wilson said: “We would become the epicentre of renewable technology.”

UCG, however, is not renewable energy, and the gas-to-liquids would be anything but "ultra-clean". The Orroroo complex would directly and indirectly emit large amounts of greenhouse gases.

As for Holloway, there is no sign that his brief as mineral resources minister obliges him to give any thought to greenhouse pollution. For a state government that claims to be the greenest on the Australian mainland, this is revealing.

Pilot operation

Based in Brisbane, Linc Energy has a majority stake in the world’s only commercial-scale UCG plant, in Uzbekistan in Central Asia. For more than a decade, the firm has sought to develop and apply this technology in Australia. Since 1999, Linc has had a generally successful pilot UCG operation at Chinchilla in Queensland.

UCG involves drilling into coal seams and setting fire to them, pumping in air to keep the combustion going. The oxygen in the air reacts with the coal and with water from the seams to produce a “syngas” that includes hydrogen, carbon monoxide, butane and methane.

This is led off through other wells to the surface, where it can be burnt to create electricity or used for petrochemicals production.

As a way of getting energy from coal, UCG has important advantages. Disturbance to the surface is minimal. The coal seams must be relatively thick, and must be chosen so that combustion products do not leach into groundwater. However, coal quality does not need to be high, and the depths can be much greater than for conventional mining.

Costs can be low — according to Linc, similar to those for conventional power plants burning cheap Australian thermal coal. Because the syngas contains large amounts of hydrogen, which when burnt creates water, the greenhouse "footprint" of UCG energy production is much smaller than for conventional coal and, according to at least one study, also smaller than for natural gas.

Syngas, though, is still for the most part a fossil fuel that, when burnt, produces carbon dioxide. The message from climate science is blunt: if a climate anything like that of the present is to remain, net global emissions of greenhouse gases must peak in the next few years, decline swiftly thereafter, and end completely by 2050. Linc’s Orroroo project has an estimated life of 75 years.

If this first Western-world UCG project goes ahead, and returns the profits Linc hopes for, the further prospects are alarming. Pressure will multiply from coal interests to use UCG syngas — cheaper and less polluting than other fossil fuels — as the basis for future national energy grids.

Ultimately, carbon emissions from UCG could far outstrip those from conventional coal.

According to “The Lawrence Livermore National Laboratory estimates that using UCG could increase recoverable coal reserves in the USA by 300 percent.”

Meanwhile, what about those synthetic fuels? In its gas-to-liquids plant, Linc plans to use a version of the Fischer-Tropsch process, which provided much of German diesel production during the WWII.

A 2001 US Department of Energy (DOE) report analysed life-cycle greenhouse emissions for Fischer-Tropsch diesel from various feedstocks. When coal is used, the total carbon footprint is close to twice that for conventional petroleum diesel.

Even with gasification taking place underground, the DOE figures indicate, Linc’s "ultra-clean" diesel would be much dirtier than its petroleum-based counterpart.

In 2008, Linc estimated the cost of its synthetic fuels at US$25-$28 per barrel, far below the price for conventional crude oil. By providing a cheap "extender" for petroleum-based fuels, UCG diesel could delay almost indefinitely the point at which cost pressures forced a shift to new technologies such as electric vehicles.

Hundreds of millions of internal combustion cars and trucks would stay on the roads — at higher total emissions per kilometre travelled.

Climate change

With the arrival of Linc in Orroroo, residents are reportedly looking forward to increased trade in their shops, fresh players for their netball and football teams, and higher values for their housing. UCG promises to be their lifeboat, keeping their town’s economy afloat even as climate change forces agriculture far to the south.

Labor Premier Mike Rann is less deserving of sympathy. South Australia has huge resources of renewable energy, which the government should be looking to develop to end all carbon emissions from electricity generating within a decade. Coal-fired power — currently represented by two ageing plants at Port Augusta — should be vanishing from the picture.

Rann and his ministers know that blocking Linc’s plans would attract criticism from big-business media outlets, and send a flood of coal money pouring into the state’s opposition Liberal Party. Meanwhile, refusing permission for the Orroroo scheme would not save the state’s northern wheat lands.

But with nature and civilisation at stake, the planet-killers of the coal industry cannot be accommodated — anywhere, any time. This is the attitude that the government should be showing, and that environmentalists must bring to the task of stopping the Orroroo project from going ahead.

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