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By John McGarrity
LONDON, Oct 1 (Reuters) - Plans to burn Britain's largereserves of coal to produce gas for power plants may wait foryears because of concerns about climate change and a publicperception that the technology is similar to fracking.
Cluff Resources, one of the companies trying todevelop underground coal gasification in Britain, said thetechnology is not likely to be deployed for at least anotherfive years, while government officials are tied up with thepublic opposition to hydraulic fracturing, or fracking, forshale gas.
"The opposition to fracking has caught the government andcompanies drilling for shale gas by surprise, and it is takingup a lot of their executive time. Accordingly, we need toexplain the absolute difference between fracking and theoffshore coal gasification technology," the company's chairman,Algy Cluff, said in an interview.
In common with fracking, underground coal gasificationentails the injection of a mixture of compounds to yield a gasthat can be used in power generation. Both techniques createtoxic byproducts that must be removed from the processing siteand made safe.
Coal-to-gas projects involve boring mostly into thin,unmineable coal seams deep offshore. A mixture of air, oxygenand steam is injected underground to combust subsea coalreserves.
By contrast, fracking unlocks natural gas throughhigh-pressure injection of chemicals, sand and water atland-based sites.
Cluff, who helped pioneer the development of Britain'soffshore oil and gas industry in the 1970s, said undergroundcoal gasification sites could use much of the pipelineinfrastructure already in place to transport the gas and wouldbe much less disruptive to rural communities than fracking forshale gas.
Cluff and at least four other companies - Clean CoalLimited, Five-Quarter Energy, Riverside Energy and Europa Oil &Gas Limited - have been issued with 21 licenses for coalseam blocks.
But additional permits will be needed from a range ofgovernment agencies before drilling and production can start.
"A SECOND NORTH SEA"
The process was first adopted on a wide scale by the SovietUnion during the 1930s, but after the Second World War thetechnology failed to advance beyond the experimental stagebecause of cheap oil and gas prices.
Higher gas prices and technological improvements haverekindled interest in underground coal gasification in recentyears. Four projects are currently operating in Australia,China, South Africa and Uzbekistan.
Britain produces around half of its natural gas from theNorth Sea, and that figure is likely to fall to around 25percent by 2030, according to government estimates, increasingits dependence on imports from Norway and Qatar.
"We are potentially talking about a second North Sea here(in terms of gas production from coal). It's far too big anopportunity for government and energy majors to ignore," Cluffsaid.
In this technology, the coal from deep seams is burned, andthe resulting gases are processed. Carbon dioxide and toxicbyproducts are separated from gas that is used to generate powerand to manufacture industrial chemicals.
The CO2 could be pumped back into the subsea cavities andnearby depleted oil and gas wells, Cluff said.
Burning coal underground and using the gas for powergeneration produce twice the carbon per megawatt-hour of aconventional gas-fired power plant.
Britain's government has already said it will allowunderground coal gasification only if the process uses carboncapture and storage, a technology that has struggled to attractfunding because of high costs and technicalobstacles.
Not including the expense of carbon capture and carbonpermits, the cost of coal gasification and the resulting powergeneration would amount to around 52 euros per megawatt-hour (44pounds/MWh), according to a recent EC-funded report, comparedwith an estimated 48 euros per MWh from conventional gas powergeneration in Britain.
Meanwhile, local opposition is growing in coastal areas ofeastern and northern England, Wales and Scotland near theproposed coal gasification projects.
Frack Off, the pressure group that coordinated protests thissummer against exploratory drilling for shale oil in Balcombe,southern England, has said setting fire to coal undergroundwould be "insane".
"Previous small-scale tests have been dogged bycontamination of groundwater with toxic and carcinogenic coaltars, explosions and other mishaps. On an industrial scale itwould rival the Canadian tar sands for scale and environmentalimpact, producing vast streams of toxic waste," the group said.
Critics say the technology would be more carbon intensiveeven than traditional coal mining.
But Cluff and other operators said Britain's toughregulations, use of deep offshore coal seams, carbon capture,good management and regular monitoring would mean that theycould gasify coal without polluting air, water or soil.
