|
Trust Land Office offering UGC licenses Proposed licensing program covers 190,000 acres across three boroughs, Land Office sees opportunity in declining gas production Eric Lidji For Petroleum News
The Alaska Mental Health Trust Land Office plans to license a broad swath of land to exploration companies interested in producing natural gas from deep coal deposits.
The proposed licensing area would cover 190,000 onshore acres spread across the Denali Borough, the northern and western Cook Inlet basin and the northern Kenai Peninsula.
The Trust plans to spur development of the lands through a process similar to the one the state uses to promote oil and gas activity in remote and underexplored basins. Applicants pay a rental fee for a license to study all or some of the area. That license can eventually be converted into traditional exploration leases, and then development units in turn.
Rather than offer oil and gas leases, though, the Trust wants companies to pursue underground coal gasification. The process is a way to develop the energy potential of coal deposits too deep for mining by pumping air and water into underground coal seams that have been ignited. The heat and oxygen converts the solid coal into a gas.
The program would offer a seven-year license at $1 per acre. If the licensing leads to leasing, the Trust is proposing to offer the land for an initial five-year term at $4 per acre per year with a single five-year extension that could be extended further by production.
The Trust sees the land offering as a way to take advantage of concerns about declining natural gas production in Southcentral. “Given the current energy situation in the Cook Inlet, and the projected shortfall of natural gas supplies in the future, the possibility of producing energy supplies from the coal resources affected by this decision are ‘best market’ resources that should be offered now rather than later,” Marcie Menefee, acting executive director of the Trust Land Office, wrote in a June 17 best interest decision.
The Trust is taking comments on the proposal through July 20.
UGC interest on the rise Although no underground coal gasification operations are currently under way in Alaska, local coal resources are increasingly capturing the imagination of exploration companies.
Cook Inlet Region Inc., an Alaska Native corporation, and Houston-based Laurus Energy are proposing 100-megawatt power plant north of Tyonek on the west side of Cook Inlet run on gas produced from underground coal deposits. The Australian exploration company Linc Energy recently acquired the Cook Inlet leases of GeoPetro with the stated goal of pursuing underground coal gasification opportunities across the Cook Inlet.
Currently, coal production in Alaska is limited to the Usibelli Coal Mine operations around the Healy area. PacRim Coal is proposing a large coal strip mine near Tyonek.
Previous attempts to promote coal gasification in Alaska involved building a plant where mined coal could be converted to natural gas or liquid fuel through a similar process.
| 