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Vol. 14, No. 42 Week of October 18, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

CIRI plans coal to gas

Underground coal gasification could fuel power generation for Alaska Railbelt

Alan Bailey

Petroleum News

There was almost a round of cheers at the joint meeting of the Alaska House Resources, Senate Resources and Senate Energy committees in Anchorage on Oct. 9, as enthusiastic legislators listened to executives from Cook Inlet Region Inc. unveil a plan to develop an underground coal gasification plant on CIRI land on the west side of Cook Inlet, with no requests for state funding for a project that might supply electrical power for the Alaska Railbelt for many years to come. CIRI is the Native Region corporation for the Cook Inlet area.

“Our project we believe is a very exciting one,” Margaret Brown, CIRI president and CEO, told the committee members. “We have been quietly investigating this project and the technology … for a year. … We feel we have something to offer the citizens of Alaska.”

100-megawatt plant

The first phase of the project, which CIRI hopes to complete in 2014, would bring into operation a syngas-fueled, combined-cycle, 100-megawatt power plant, feeding electricity into the Alaska Railbelt power grid at Beluga. Syngas, also known as “town gas,” is produced by a chemical reaction triggered by the heating of coal with water and oxygen; the subsequent extraction of waste carbon dioxide from the reaction products leaves a flammable mixture of carbon monoxide, hydrogen and methane, explained Ethan Schutt, CIRI senior vice president for land and energy development.

The underground coal gasification process, generally abbreviated as UCG, involves the pumping of compressed air into a coal seam deep underground to enable the controlled underground combustion of some coal; the heat from the burning converts excess air and the bulk of the coal to syngas for delivery to the surface through production wells. In the CIRI project carbon dioxide produced along with the syngas would be extracted for use in enhanced oil recovery in nearby Cook Inlet oil fields. About 80 percent of the energy content of the coal would be recovered in the syngas, Schutt said.

No coal mining would be involved; waste products such as slag would be left underground; and the gasification process would take place a long way below any freshwater aquifers.

The 100-megawatt power plant would support a fairly modest component of a total Railbelt power demand that peaks at around 1,200 megawatts in the winter. But the CIRI proposal comes at a time when there are questions regarding the ability of the Cook Inlet oil and gas fields to continue to produce sufficient natural gas for heating and power generation in Southcentral Alaska — natural gas is the primary energy source for power generation in the region.

“This is not the silver bullet, but it’s a very significant and timely potential contribution,” Brown said.

The project would likely offset production of about 9 billion cubic feet per year of Cook Inlet natural gas, Schutt said.

The CIRI project stands a good chance of becoming the first commercial UCG project in North America, and would be the first project worldwide to combine UCG with carbon capture and sequestration, Schutt said.

Future expansion?

And if phase one of the project pans out, there is the future potential to expand the operation, possibly adding a plant for the upgrade of syngas to synthetic natural gas for delivery to gas utilities, and possibly adding a gas-to-liquids facility for the production of synthetic liquid fuels, Schutt said.

The project area lies north of the Beluga River, in remote, largely uninhabited land, a few miles inland from Chugach Electric Association’s Beluga gas-fired power plant on the Railbelt power grid. As well as being quite close to the power grid, the project is situated conveniently close to a pipeline system that ships utility gas into the Matanuska-Susitna Borough and to Anchorage.

The area is known to have huge coal resources and CIRI plans to tap into just one of a series of stacked coal seams in its land.

“We know that we have a 55-foot thick coal seam in our project area at a depth of about 1,850 feet,” Schutt said.

Because the properties of the coal in the Beluga area are fairly well known, CIRI has been able to estimate the rate of energy production achievable from the target seam and has determined that the 100-megawatt power plant would use about three acres of the seam per year, thus consuming only about one square mile of the coal during the anticipated 30-year life of the power plant.

And given the thousands of acres of CIRI land in the area, just that one coal seam could potentially provide energy for tens of thousands of years, Schutt said.

CIRI estimates that the phase one underground coal gasification system would cost about $30 million, with the associated power plant costing an additional $150 million. The enhanced oil recovery system for disposing waste carbon dioxide might cost around $200 million, depending on which Cook Inlet oil field uses the system, Schutt said. CIRI would fund the project itself.

Viable pricing

Plugging the projected costs into the economics of the planned project indicates that the syngas fuel could be produced at prices competitive with the current pricing of Cook Inlet natural gas, with syngas perhaps losing out if gas prices were to drop below about $5 per thousand cubic feet, Schutt said. And, given that most electricity in the region comes from gas-fired power stations, it should be possible to generate electricity from the coal gasification system at an acceptable price level, he said.

CIRI is establishing a development deal involving its development partner, Laurus Energy, using UCG technology from a Canadian company, Ergo Exergy Technologies — Laurus Energy specializes in UCG applications in North America. CIRI is using Lawrence Livemore National Laboratory as its technology consultant for the UCG project.

Brown and Schutt assured the legislators that UCG is a proven technology, with a 50-year history worldwide. Currently there are UCG operations in China, India, South Africa and Australia, Schutt said. Russia also operates a UCG plant, the last of 16 plants established in the former Soviet Union but later rendered obsolete by the discovery of large quantities of cheap Siberian natural gas, he said.

Drilling this winter

CIRI has already applied for the first drilling permits for its project and the corporation plans to drill the first of its wells — a series of site-evaluation wells spaced widely across the project area — fairly early in the coming winter, to obtain geologic information for site selection. The preliminary geologic information from these wells should be available by January or February, in time to do some pre-feasibility drilling at a selected site later in the winter. That would be followed by further drilling for site characterization in the fall of 2010, Schutt said.

A road constructed 10 years ago by Forest Oil, when Forest drilled an unsuccessful gas well on CIRI land, will provide access to the project area.

In its project plan, the corporation is allowing two years for permitting, including the preparation of an environmental impact statement. That would then leave sufficient time for construction of the UCG plant, power station and other facilities in time for the planned 2014 startup.

Critical to the question of site selection is the need to ensure that the UCG operation does not pollute freshwater aquifers in the area. To ensure that the gasification occurs well below any aquifer, the target coal seam needs to be at least 650 feet below the surface, with an impervious rock layer such as shale or clay lying between the seam and the aquifer, Schutt said. In fact, CIRI is planning to use a coal seam substantially deeper than the minimum required depth, with the intention of providing a future option to sequester carbon dioxide in the underground chambers left behind by the gasified coal, should this type of sequestration become necessary.

And an abundance of clay layers known to exist in the rock strata in the project area should provide effective protection for the aquifers.

However, surface subsidence as a consequence of the collapse of an exhausted underground UCG chamber is a concern, especially as the subsidence would cause deep vertical fractures to form, breaking the integrity of seal rocks and opening the possibility of water contamination. Careful site selection is a key factor here, taking into account geologic parameters that impact rock stability.

So, to eliminate any water contamination and subsidence risk, an essential precursor to any development is an assessment of the geologic characteristics of the proposed development site, using data from well cores, for example.

“You validate all of the geological characteristics through extensive study before development,” Schutt said.

Once a site is selected, the permitting completed and development under way, CIRI anticipates initially drilling two to three injector wells and six to eight producer wells. The surface footprint of the UCG system would be quite small, with some processing and cleanup of the syngas required, together with a small amount of water handling for condensed steam.

“The surface infrastructure looks a lot like a natural gas well pad,” Schutt said. “We will have some wellheads coming out of the ground, connected by pipe to the production and injection aspects of the system.”

Over time, more wells will be needed, to move the site of the underground gasification chamber as the coal is gradually consumed, he said.

Tightly controlled

The underground burn of the coal, generating the heat for the gasification, can be tightly controlled by the supply of air through the injector wells: Cutting off the air supply would snuff out the burn, thus eliminating any possibility of an out-of-control underground coal fire, Schutt said.

In addition, the air injection is used to control the pressure in the UCG chamber. The pressure needs to be slightly lower than the prevailing subsurface pressure to encourage water, an essential ingredient of the UCG process, to flow from the coal seam into the chamber. Too high a pressure in the chamber would force gasification products out into the seam, creating a risk of loss of control of the process, Schutt explained.

The moderate temperature of the syngas reaching the surface through the production wells, coupled with suitable carbon dioxide concentrations and gas pressures, would make sequestration of the carbon dioxide with proven scrubbing techniques very straightforward, much more straightforward than sequestering carbon from an exhaust stream from a power station, Schutt said.

“Carbon dioxide is easily separated by existing, commercially available technologies,” he said.

Permitting risk

At present, CIRI sees permitting as the biggest project risk, essentially because there is no track record for permitting this type of project in Alaska — the existing suite of permits used in Alaska doesn’t map particularly well onto the project, thus raising the need to cobble together a set of permits from different permitting regimes, Schutt said.

CIRI has held a preliminary meeting with the commissioner of the Alaska Department of Environmental Conservation and is planning a series of meetings with regulators in November, he said.

However, the project has received a moderately positive reception from environmental groups, principally because of CIRI’s plan to sequester carbon dioxide in an enhanced oil recovery operation, an operation that would substantially reduce the carbon footprint of the project through the use of an existing oil infrastructure, Schutt said.

CIRI says that carbon sequestration through enhanced oil recovery is a proven technique with a 25- to 30-year track record in Texas and Louisiana. But the corporation has yet to discuss its enhanced oil recovery concept with any of the Cook Inlet oil producers, Schutt said.

If, however, the enhanced oil recovery proposal does not work out, CIRI would seek some alternative means of carbon sequestration, perhaps using a depleted oil or gas field. In the event of needing an alternative sequestration approach, CIRI might seek federal funding in the form of assistance for a sequestration experiment — the required sequestration techniques are not yet proven.

But CIRI does feel very optimistic about its UCG plans.

“We believe that UCG is a unique technology that addresses both the economic and environmental concerns,” Schutt said. “… We do have a world class (coal) resource and this project is the first step towards commercializing it.”

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