Underground Coal Gasification (UCG) hit the headlines in Australia for all of the wrong reasons in July. The Department of Energy and Mines (DEM) of the Queensland state government ordered a shutdown of the Cougar Energy UCG facility at Kingaroy, following the detection of benzene and toluene in monitoring bores.
Even though the company quickly managed to establish that the laboratory results – which it had submitted under voluntary reporting rules - had in fact been incorrect, and the Queensland Department of Environment and Resource Management (DERM) acknowledged that when it checked borehole results, levels of the chemicals were lower than permitted levels in Australian drinking water, the damage had already been done. DERM director general John Bradley actually came out and said that; "in all cases these are below the Australian Drinking Water Guideline standards. The maximum level of benzenes detected was 0.7 parts per billion (ppb) compared to an Australian drinking water guideline standard of 1.0 ppb and this was only detected at the Cougar Energy plant site itself. Although it is difficult to compare exposures from drinking water to those in air, by comparison, this is less than 10% of the benzene level in the air of a city street and up to six hundred times less than the air at a suburban petrol station.”
However, in spite of these reassurances, local residents have been up in arms, and the DERM has ordered that Cougar keep the Kingaroy plant closed until the government is “assured that groundwater resources are protected”. The company was forced to lay off staff and has been placed into a parlous financial position. Shares have plummeted to just 2.3 cents, and just as I was writing this came news that the company’s chief financial officer and company secretary Rodney Watson had resigned. The company posted a full year net loss of A$4.1million, up from A$2.9 million for 2008/09, and said that it might not be able to continue as a going concern, as forecast working capital requirements for the next 12 months exceeded its current cash position.
Cougar has placed the blame squarely at the government’s door for its demise, and not without justification, it seems. But if this is what happens even when chemical levels in water are within permitted drinking limits, one can only imagine what would happen if they were not!
Two other companies are also operating UCG bores at pilot plants in Queensland; Carbon Energy at Bloodwood Creek and Linc Energy at Chinchilla, the latter of which we reported on in Nitrogen+Syngas issue 303 (Jan/Feb 2010). While both are still operating, Queensland has imposed a moratorium on new operating licenses and issued Environmental Evaluation Notices to all of the projects. The matter has made its way to the Federal government, where the Green Party is now pushing to amend environmental legislation, while Senate candidate for Queensland and co-founder of the Republican Democrat party Peter Pyke has said that if elected he would fight to scrap UCG drilling country-wide.
As a potentially promising technology to harness coal reserves in a clean and safe way, an environmental scare – even an apparently spurious one - is really the last thing that UCG needed. As delegates at the UCG Partnership conference in London earlier this year told me, it was already difficult enough to try and convince investors in a technology which many had thought a dead end after abortive trials in the 1970s and 80s, but which has been given a new lease of life by modern drilling and computer modelling techniques. With the fate of Cougar Energy fresh in peoples’ minds, that task has just become harder still.
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Richard that is an excellent summary of the unfortunate events that unfolded. I was contacted by one of the protesters who appears to be a local member from Kingaroy. She is still adamantly opposed to UCG despite that there is no evidence of harm.
ReplyDeleteIn many ways the Qld UCG players seem to have been expecting something like this. For example LINC arguably the most advanced UCG operator in terms of longevity and usage of Syngas provided themselves (and their investors) with an escape path by buying Sapex's South Australian coal deposits in the Arckaringa Basin. Whatever else the Arckaringa Basin cannot be described as other than an arid, virtually uninhabited place. And that is where Linc are going to set up their first UCG-GTL 20,000 barrels of oil per day facility. Another arid, uninhabited place is the Perdika Basin where Central Petroleum has just on a trillion tons of UCG suitable coal with very thick seams making it ideal for the UCG process. Whether a Qld company teams with Central or another player forms a JV with them or perhaps even Central, on the back of $s earned on the back of a successful oil strike, will start a UCG-GTL plant seems to be inevitable. Inevitable as Central's trillion tons of coal has the potential to produce a couple of trillion barrels of ultra clean diesel and other liquids.... Thus putting Australia on the pathway to liquid fuel independence. For those that would like to understand more about UCG and UCG-GTL from the Australian perspective see www.UCG-GTL.com and if you'd like to see how the various companies have been whacked by the issues mentioned in the article above see: http://www.ucg-gtl.com/UCG-GTL-companies.html
cougar energy have been the victim of A] a incorrect lab reading B]knee jerk reaction by the qld labour government and the greens, UCG [WHEN] allowed to prove itself will be a future energy source, cleaner and more efficient than CSG, coal seam gas companys have been able to operate with minimum testing and investigation, all this may change with the greens pushing labours boundrys with enviromental checks and balances, BUT with multinationals companys driving operating CSG, the big boys in this industry dont want UCG, with a serious enviromental scare from CSG resulting from lab tests, the truth will show how much cleaner, efficient, cheaper UCG is.
ReplyDeleteThank you for the balanced comments within. In an off beat counter logical way, there is every chance this event with Cougar, carried through to a successful re-ignition and a successful trial burn will strengthen UCG ... it will have survived incredible scrutiny, just some of it scientific, and not be found wanting. Regards, Richard
ReplyDeleteThis is all about the LNG plant at Gladstone. Once the LNG plant is operating, the CSG companies will claim that, of course, the price of CSG must reflect the much higher world price, and the stupid Qld electricity consumers must cough up more and more cash. However, if the power companies can switch to much cheaper UCG, the CSG producers will lose their local market. BG kicked this one off by claiming that Linc's program at Chinchilla threatened their supply of CSG from the same resource. This is why Linc moved to SA. The Qld government is in the GSG producers pockets, since the higher CSG prices and overseas exports mean higher royalties, and Labor has been overspending like mad, and needs lots more money to restore the States credit rating. Hence the crackdown by DERM. Since you can't fight city hall, the only solution for the UCG companies is to get out of Qld. The amusing part is that the Green/rural alliance of convenience now seems to be trying to extend the panic to whack CSG on the head as well. It'll be interesting to see how far they succeed.
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