Linc suspending UCG program

Linc Energy Ltd. is suspending is underground coal gasification program.

The Australian independent cited market conditions for its decision to pause the project, which aimed to commercialize synthesized natural gas created in deep coal deposits.

“The Alaskan UCG project has been paused with the intention to reconsider this endeavor when market conditions recover and a more sustainable long-term outlook can be determined,” the company wrote in recent filings. “The team is presently exploring options to limit our ongoing exploration liabilities via assignment of the tenements.”

As recently as early October, the company was still promoting the viability of an underground coal gasification project, estimating local demand for synthesized natural gas of 35 billion cubic feet and additional demand overseas through liquefied natural gas exports. Over the coming year, the company expected to finalize a commercial pathway for a proposed synthesized natural gas hub in the region and also to enter “several supplier agreements” to provide both synthesized natural gas and carbon dioxide.

The company arrived in Alaska in early 2010 with the intention of launching a pilot program to prove its underground coal gasification technology. With half of the known coal reserves in the United States, Alaska was an intriguing location for the company.

In the nearly six years since, Linc greatly expanded its portfolio of underground coal gasification leases in the Cook Inlet and Interior regions, commissioned a fit-for-purpose rotary-core rig and drilled several pilot holes on the west side of Cook Inlet near Tyonek.

Underground coal gasification is a process for synthesizing natural gas by injecting heat and oxygen into deep coal seams to “create” methane from the carbon contained in coal.

In the same recent filing, Linc said it is “prudently progressing with permitting and development plans” for a development at the Umiat oil field in the foothills of the Brooks Range mountain. The company said it remains to discussions with unnamed “interested parties” to sell the field, but that recent market downturns have slowed any progress.

- ERIC LIDJI